It appears banks are playing hardball with Daffy’s. Credit sources said Tuesday that banks haven’t been pleased with monthly results since April. As it seeks a way to ensure a future, the firm continues to work with legal advisers Weil, Gotshal & Manges. The retail chain has been in talks with lenders for over a month without a resolution in sight.
While Weil has been working with Daffy’s as its counsel for some time, on Tuesday sources said the law firm now is on a separate track involving a bankruptcy filing in case that was necessary.
Initially, some credit sources in late June were discounting the bankruptcy rumors as just talk from angry buyers who had been told to take an unanticipated vacation while the chain was trying to reach an agreement with lenders.
Marcia Wilson, Daffy’s chairman and chief executive officer, did not return a call for comment.
A spokeswoman for Weil said: “Daffy’s is a long-standing client of Weil, Gotshal & Manges. It is our policy to keep all client matters confidential.”
Another financial source familiar with the ongoing negotiations at Daffy’s said that solicitations had been sent to several liquidation firms as well, as the retail chain seems to be pursuing all possible options.
One of those individuals said a buyer might materialize from someone interested in the real estate, but that left the question of whether such a play would allow the company to continue as a business. Moreover, it wasn’t clear how the real estate was owned, whether it was via the company or through a separate holding firm. The other source believed that a few of the real estate assets might be held outright by Wilson.
Speculation on the real estate assets is occurring as some creditors are wondering what their return might be should an agreement with Daffy’s lenders not happen. In that scenario, Daffy’s is likely to file a petition for Chapter 11 bankruptcy court protection unless it can find a buyer.
Even though it remains unclear which direction — a sale or a bankruptcy filing — the retailer is headed, many are of the opinion that it may not matter in the long run. Some feel that the writing is on the wall, given the extensive competition from firms in the off-price space, many of which do a better job and carry well-known brands.
That’s not to say that it couldn’t find an alternative financing arrangement, but those firms who lend is this area typically charge higher fees due to the perceived risk involved when lending to a distressed firm. The other concern is how much time the alternate financing for a commercial loan would buy and whether it is worth the additional costs.
The $150 million, 19-unit retailer hasn’t paid invoices from vendors since May.
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)
The @cfda has shifted the dates of #NYFW, with Men’s showing on February 5 through February 7, and Women’s will directly follow, running from February 8 through 14. The preliminary schedule will be released on the CFDA’s web site in the next few days, but Mark Beckham, VP of marketing for the CFDA, revealed that @rafsimons will be back to close the men’s-specific part of the week with a show on February 7 #wwdfashion (📷: Kelly Taub)
@ferragamo is introducing a new space dedicated to the development of women’s and men’s leather good samples. The laboratory, which is created eco-friendly materials and designed to reduce the environmental impact of the manufacturing processes, will allow the company to expand its accessories offering through traditional artisanal approaches. #wwdfashion (📷: @aitorrosasphoto)
How does a “regular, degular, schmegular” girl from the Bronx, N.Y., become a Grammy-nominated artist with a certified platinum record in less than a year? Call it the @iamcardib come up. The 25-year-old has become a musical sensation, and the fashion world is taking note. “If I could describe her style I would say drama. She’s really into the dramatics,” says Cardi B’s stylist @kollincarter. See how Carter styles her bold and out there looks with the link in bio. #wwdfashion
“There is no formula. There is no guideline. I can watch Ted Talks all day, but there is no one who can advise me on exactly what it is I should be doing,” said @ronniefieg, CEO of @kith, in an interview with WWD’s @ariahughes at the brand’s new SoHo office in Manhattan. Head to WWD.com to see how Fieg went from hanging out in shoe stockrooms at 13 to building his own business. #wwdfashion (📷: @weston.wells)
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion