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If survival of the fittest is the name of the game, the following firms probably should have spent more time at the gym. Impacted mostly by severe debt and an inability to find a way out, they filed for bankruptcy protection, and some liquidated. A few brands were fortunate and found new owners, but at least three retailers — Bakers, Daffy’s and Mark Shale — closed up shop.
This story first appeared in the December 10, 2012 issue of WWD. Subscribe Today.
Following are the 10 biggest bankruptcies of the year, ranked by actual or estimated liabilities.
ARCAPITA BANK BSC: Founded in 1996 as First Islamic Investment Bank, the Bahrain-based firm listed liabilities of $2.55 billion when it filed in March. Apparel retailer J. Jill and accessories retailer Bijoux Terner are investments under the Arcapita umbrella, although neither operating subsidiary were parties to the filing. Arcapita, still in bankruptcy, last month secured a $125 million loan from Fortress Investment Group, which buys it time to restructure without having to sell off investments.
THE PEACOCK GROUP: The British fashion retailer entered administration in January, the U.K. equivalent of Chapter 11 in the U.S. It is considered the biggest British retail collapse since Woolworths in 2008. The company, which had $295.6 million in debt, sold off its assets. Sun European Partners, the European advisor to Boca Raton, Fla.-based Sun Capital Partners, acquired the Bonmarché apparel chain, while Edinburgh Woollen Mill acquired the Peacocks chain.
UNITED RETAIL GROUP: The company operated Avenue, the plus-sized women’s apparel chain, and was under the umbrella of the PPR-owned Redcats USA division, which was not part of the filing. Listing liabilities of $67.3 million when it filed in February, Avenue was acquired by Versa Capital, which also owns Bob’s Stores.
HMX GROUP: The men’s apparel firm formerly known as Hartmarx Corp. is in the process of completing its second tour of bankruptcy in four years. Listing liabilities of between $50 million and $100 million when it filed in October, the owners of suit brands Hart Schaffner Marx and Hickey Freeman are in the process of selling the company through a bankruptcy court-sponsored auction.
BAKERS FOOTWEAR GROUP: The footwear and accessories chain in October defaulted on a $30 million secured credit facility. Listing $59.5 million in liabilities, the chain is now liquidating. Based in St. Louis, Bakers went public in 2004 and counts as investors Steve Madden Ltd. and Peter Edison, Bakers’ chief executive officer, who once held various positions at Edison Brothers Stores.
THE CONNAUGHT GROUP: Founded in 1982 by William Rondina, the direct seller of high-end apparel filed in February, listing liabilities between $50 million and $100 million. It was sold for $22 million to a joint venture called Forty-Three Eighty Co., comprising men’s wear custom suit manufacturer Tom James Co. and Hong Kong-based Royal Spirit Group, Connaught’s largest vendor.
DAFFY’S INC.: The 51-year-old off-pricer founded by Irving J. Shulman in 1961 as Daffy Dan’s Bargaintown in July decided to shutter its stores, but first made a quick stop in bankruptcy court in August to avoid being forced into insolvency by its factors trying to protect $37 million in unsecured creditor claims. The chain could not compete with other off-price chains that provided consumers with better deals on in-season merchandise.
BETSEY JOHNSON LLC: The licensee, which operates the designer’s freestanding stores and e-commerce site, listed liabilities of $15.4 million in its April filing. It was run by Castanea Partners, the Boston-based private equity firm which held a controlling stake since 2007. The Betsey Johnson brand, which is owned by Steve Madden, was not involved in the filing.
MS MARK SHALE LLC: After 83 years in business, distressed men’s specialty retailer Mark Shale shuttered its three remaining Chicago stores. The high-end retailer, which had liabilities of $5.6 million, filed in August after being unable to find a strategic partner. It was the third tour of bankruptcy proceedings for the chain over a 17-year period. It was founded by Shale Baskin in 1929 and was formerly known as Al Baskin.
AQUASCUTUM: The 161-year old British brand entered administration in April and was acquired in May by YGM Trading, owner of Guy Laroche. It purchased for $18.5 million the assets of Aquascutum that it didn’t already own. YGM, a Chinese firm, represents the burgeoning trend of licensees acquiring the brands it licenses.