With plunging consumer spending and nervous lenders, 2009 was predicted to be another difficult year for retailers. For Eddie Bauer, a large outdoor-clothing chain with more than 370 stores nationwide, three years of annual losses combined with debt from a previous bankruptcy forced a Chapter 11 filing. Still, the company and its 7,700 U.S. employees were hopeful that the business might be saved.
As one of the country's few law firms with a leading national practice representing landlords in Chapter 11 cases, Ballard Spahr was engaged by landlords who collectively leased more than 100 stores to Eddie Bauer to protect their interests in this tenant bankruptcy proceeding. The case involved varied leasing structures and locations across the country. We advised our clients with regard to the assumption or rejection of their leases and positioned them early on to save time and money.
Through its bankruptcy auction, Eddie Bauer won the right to select among several bids, which ranged from liquidating all assets to selling the company as an operating business. One of our clients served on the creditors' committee, which sought an outcome that would preserve jobs and continue operation of the business. The winning bidder was a private equity firm, which plans to keep most of the chain's stores open—a favorable result for the creditors and our landlord clients.