Le Tote’s bold strategic move to buy Lord & Taylor for $75 million last year wasn’t enough to keep both companies from bankruptcy court in the midst of the coronavirus crisis.
Along with its Lord & Taylor business, Le Tote filed for Chapter 11 bankruptcy protection in the Eastern District of Virginia on Sunday.
The company temporarily closed its 38 stores in March and carried on business through its Le Tote and Lord & Taylor web sites, but it wasn’t enough. The firm, which has 651 employees, came to court with $137.9 million in funded debt obligations.
Le Tote’s bankruptcy leaves a lot of unpaid debts for big-name designers and brands.
Although the company’s largest creditor is the Israel-based Liquidity Capital II, owed $8.5 million in bank debt, the firm’s trade debtors include G-III Leather Fashions Inc. (owed $4.7 million), Polo Ralph Lauren Clothing ($3.5 million), Michael Kors LLC, ($2.1 million), L’Oréal Lancôme ($1.2 million), Facebook Inc. ($1 million) and Chanel Inc. ($745,277).
Le Tote found its start as a rental subscription business in 2012 and has proven to be bold.
“Since founding Le Tote, it’s been our mission to push the boundaries of retail,” said Rakesh Tondon, Le Tote’s chief executive officer and founder, when the deal with Lord & Taylor was signed a year ago this month. “We’ve strived to lead the charge in developing innovative, intuitive, value-driven ways for customers to engage and consume. We’re excited to bring Le Tote together with Lord & Taylor, a storied brand that has stood for quality, style and service for nearly two centuries. With this acquisition, we continue our journey in creating the future of retail.”
Although it was just a year ago, no one was thinking back then that the future of retailing would include a complete industry-wide shutdown, a global pandemic and an unprecedented wave of bankruptcies.
Neiman Marcus Group, J. Crew Group, J.C. Penney Co. Inc., Brooks Brothers, Lucky Brand and many others have already filed. And Tailored Brands, which owns Men’s Wearhouse and Jos. A. Bank, said last week that it would “likely” succumb to its debts as well.