Mon 04/22/2024 18:20 PM
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Relevant Documents:
Voluntary Petition
Press Release
First Day Declaration
DIP Financing Motion
Store Closing Sale Motion
First Day Hearing Agenda

Express Inc. and its affiliated debtors constitute an omnichannel retailer including the Express, Bonobos and UpWest retail brands
Company has executed a secured stalking horse letter of intent with joint venture of shareholder and majority IP owner WHP Global and landlords Simon Property Group and Brookfield to purchase a “substantial” portion of company’s assets
Existing lenders to provide DIP financing including a rollup of prepetition debt

Columbus, Ohio-based fashion retailer Express Inc. and numerous affiliates, including the Express, Bonobos and UpWest retail brands, enter chapter 11 to reorganize and rationalize their store footprint through “strategic” store closures. The company has executed a letter of intent with a joint venture of its “significant” shareholder and majority IP owner, WHP Global and landlords Simon Property Group LP and BPR Acquisitions, or Brookfield, to purchase a “substantial” portion of the company's assets as stalking horse. The purchase price is $10 million plus 100% of the net orderly liquidation value of the “Acquired Merchandise (calculated in a manner reasonably acceptable to the Joint Venture)”. The joint venture is expected to be named “PHOENIX,” according to the letter of intent.

Stewart Glendinning, the debtors’ CEO, in his first day declaration, stresses the need for a quick 30-day process to finalize the transaction. Absent a “firm deal” in 30 days, the debtors would pivot to an orderly liquidation, as required by the DIP financing. The debtors say in a declaration from Adam Keil of Moelis in support of the DIP financing that the debtors intend to file a chapter 11 plan to “effectuate either a going concern equity sale of the Debtors’ business or one or more value-maximizing sales of the Debtors’ assets in connection with an orderly wind down.”

The joint-venture stalking horse bid provides for acquisition of (a) certain retail store and distribution center leases, (b) all inventory, merchandise and furnishings, fixtures and equipment related to all of the acquired leases, (c) the Express, Bonobos and UpWest ecommerce businesses and (d) the debtors’ 40% interest in their intellectual property joint venture with WHP Global and “other assets to be determined.” The deal also contemplates assumption of leases for at least 280 stores, employee-related obligations, customary loyalty programs, Bonobos-related customer financing arrangements, claims of the company and Bonobos with respect to the payment card interchange fee settlement, and certain overhead, logistics and technology to be identified by the joint venture. Further, the letter of intent contemplates partnership with certain of the debtors’ key landlords, including Simon Properties and Brookfield. The letter of intent also provides for a 5% breakup fee and expense reimbursement up to $5 million.

According to the letter of intent, the JV parties are the company’s “most significant strategic stakeholder and its two largest landlords,” and along with their principals, “all have decades of experience in the retail industry coupled with a world-class network of partners to ensure the long-term future of both the Express and Bonobos brands.” The letter adds that the JV intends to continue the company’s e-commerce business and “as many” existing U.S. stores as possible, to be capitalized with at least $200 million, including an equity commitment from WHP Global of at least $100 million, “providing ample capital to create a strong operation with a footprint of over 280 stores already identified to continue the Express and Bonobos brands and legacies.”

The case would be funded by DIP financing from existing lenders in the form of “(a) up to $35 million of available debtor-in-possession financing, consisting of $10 million of new availability under a first lien revolver and a $25 million new-money second lien term loan, and (b) a rollup of obligations under the Prepetition Credit Facilities in the amount of $202 million,” according to the first day declaration. The company says that it expects to have sufficient liquidity to support business during the court-supervised sale process and that it will continue to assess its store footprint with the assistance of A&G Realty Partners.

During the bankruptcy process, the company plans to continue operating its Express, Bonobos and UpWest brands in stores and online, “conduct[ing] business as usual as the Company works to right-size its lease portfolio and operations.” The company details its operations across its various brands and platforms during the chapter 11 process, noting, for instance, that “[a]ll of the Company’s brands are fulfilling orders and processing returns, merchandise return policies remain unchanged, and gift cards and store credits are currently being redeemed in-store,” and “[c]ustomer benefits related to the EXPRESS Insider program are expected to remain the same.” The company says in a press release that it “intends to close approximately 95 EXPRESS retail stores and all UpWest stores. The closing sales at affected stores are scheduled to begin on April 23.”

The debtors point to various issues plaguing brick-and-mortar retailers for their financial issues, stressing the decrease in mall traffic as the largest factor. Despite its e-commerce presence, the company still suffers from “excessive floor space” on its leases that pre-date the Covid-19 pandemic. The company also points to inflation as an attributing factor for its chapter 11 filing.

The first day hearing has been scheduled for tomorrow, Tuesday, April 23, at 2 p.m. ET.

According to the petition, the debtors estimate $1 billion to $10 billion in assets and liabilities. As of March 2, the company reported total assets of approximately $1.3 billion and total debts of approximately $1.2 billion. The largest holders of voting securities are EXWHP, Royce Investment Partners and Gerard Guez.

The company’s prepetition capital structure includes the following:

The debtors owe approximately $211.6 million in the aggregate to creditors holding claims for goods and services that may assert potential liens, according to their critical vendor motion.

According to the DIP declaration of Kunal Kamlani, the debtors have $23 million of cash on hand.

The Express docket is available on the Reorg site HERE.

Kirkland & Ellis is serving as legal counsel, Klehr Harrison Harvey Branzburg is local counsel, Moelis & Co. is serving as investment banker, and M3 Partners is serving as financial advisor. Stretto is the claims and noticing agent. The case has been assigned to Karen B. Owens (case No. 24-10831).


The debtors are a fashion retailer operating under the Express (“a go-to style destination since it burst into malls and the retail space in 1980”), UpWest (“lifestyle brand of clothing and accessories that donates a portion of their sales proceeds to charitable causes”) and Bonobos (“a menswear brand known for exceptional fit and an innovative online retail model that leverages physical tailoring ‘guide shops’ seamlessly with virtual shopping”) banners in stores in the United States, including Puerto Rico. The company’s stores are located primarily in high-traffic shopping malls, “lifestyle centers” and outlets and through ecommerce websites. Express Inc., a publicly traded company, is headquartered in Columbus, Ohio. The company has 9,300 employees.

The debtors attribute the bankruptcy filing to a “challenging commercial environment brought on by both broader economic and retail-specific market pressures.” Higher interest rates and lower consumer spending have affected “[m]ajor players across industries,” according to the debtors.

With a “substantial” brick-and-mortar store footprint and attendant expenses, along with “issues affecting the retail industry as a whole,” a “significant number” of the debtors’ stores are operating suboptimally, leading the debtors to close approximately 100 stores over the past 12 months, leaving 584 stores as of the petition date. The company also points to reduced foot traffic in malls, shopping centers and stores and increased competition from retailers offering discounts, and a lack of matching between inventory and demand. Further, Express points to supply-chain issues.

In March 2012, Express’ stock was at a high of $525 per share, but by 2017 it fell to $120 per share, “erasing up to $950 million in value,” as people shifted to online shopping. Gross profits declined from $740 million in fiscal 2012 to less than $615 million in fiscal 2018, and then to less than $530 million in fiscal 2022. For fiscal 2022, Express had a $67.5 million operating loss and negative operating cash flows of $157.1 million. The company’s reinvestment in retail stores coincided with the Covid-19 pandemic.

To combat these issues, the company focused on Bonobos’ e-commerce site, which has been historically profitable, and reduced costs in Express and UpWest storefronts. The company realized approximately $80 million year-over-year cost reductions in 2023 and says it projects another $40 million decrease in fiscal year 2024. Express is also negotiating with landlords to right-size the store footprint, resulting in deferring $40.6 million in rent obligations at 433 locations. Express leases all of its stores and offices, with annual aggregate occupancy cost of approximately $302 million.

Express also entered into a new strategic partnership with management firm WHP Global pursuant to which Express received $260 million in gross proceeds. “The intellectual property joint venture at the time was valued at approximately $400 million and allowed the Company to develop its domestic U.S. licensing capability in non-core categories and expand its brand internationally,” the debtors say. Express used proceeds from the transaction to pay down its then-term loan and a portion of its revolving credit facility. Express entered into an agreement with Walmart Inc. to acquire Bonobos in April 2023 that was arranged as part of the WHP Global strategic partnership.

Subsequently, “industry headwinds roared on,” causing net sales through the third quarter of fiscal 2023 to decrease by about $80 million year over year, even with the addition of approximately $93 million in Bonobos sales. In September 2023, the company entered into an asset-based $65 million term loan, with ReStore Capital LLC as agent and lender including First Eagle Alternative Credit LLC and 1903 Partners LC as participating lenders.

The company received a $49 million CARES Act refund that it was required to remit to the ABL lenders, which did not agree to let the company retain certain of the funds. In August 2023, Express implemented a 1-for-20 reverse stock split of common stock that brought it back into compliance with the New York Stock Exchange listing requirements. Nonetheless, on March 6, the NYSE delisted the common stock for failing to maintain an average global market capitalization of at least $15 million over a period of 30 consecutive trading days. Express’ common stock has since traded on the OTC pink open market.

Express appointed independent director William Transier prepetition. On April 19, Yehuda Shmidman resigned as an Express director but remains as CEO of WHP Global.

Moelis & Co. ran the company’s marketing efforts beginning in March for a sale and DIP financing.

The company’s corporate organizational structure is below:


(Click HERE to enlarge)

The debtors' largest unsecured creditors are as follows:

10 Largest Unsecured Creditors
 Creditor Location Claim Type Amount
LI & Fung (Trading) Ltd. Hong Kong Trade $   36,572,074
Newtimes Development Ltd. Istanbul, Turkey Trade 9,182,274
Manchu Times Fashion Ltd. Hong Kong Trade 8,902,887
Chacon Los Angeles Legal
Pacific Buying and Marketing
Service Ltd.
Hong Kong Trade 7,218,028
Radial Inc. Dallas Trade 7,114,394
Lever Style Ltd. Hong Kong Trade 5,945,516
Commission Junction LLC Chicago Trade 4,731,288
Alvarez & Marsal New York Professional
Motives New York Trade 3,177,573

The case representatives are as follows:


 Role Name Firm Location
Debtors' Co-Counsel Joshua A. Sussberg

Emily E. Geier

Nicholas M. Adzima
Kirkland & Ellis New York
Charles B. Sterrett Chicago
Debtors' Co-Counsel Domenic E. Pacitti

Michael W. Yurkewicz

Alyssa M. Radovanovich
Harrison Harvey
Wilmington, Del.
Morton R. Branzburg Philadelphia
Debtors' Investment
Perry Hall

Adam Keil
Moelis &
New York
Restructuring Advisor
Mohsin Meghji

Kunal Kamlani
M3 Advisory
New York
Co-Counsel to Wells
Fargo, as the First
Lien DIP Agent
Randall Klein

Dimitri G. Karcazes

Keith G. Radner

Eva D. Gadzheva
Goldberg Kohn Chicago
Co-Counsel to Wells
Fargo, as the First
Lien DIP Agent
John H. Knight

Paul N. Heath

Alexander R. Steiger
Richards Layton
& Finger
Wilmington, Del.
Co-Counsel to ReStore
Capital, as the Second
Lien DIP Agent
Stephen L. Iacovo

Gregg M. Galardi
Ropes and Gray Chicago
Co-Counsel to ReStore
Capital, as the Second
Lien DIP Agent
Mark L. Desgrosseilliers Chipman, Brown,
Cicero & Cole
Wilmington, Del.
Financial Advisor to
ReStore Capital, as
the Second Lien DIP
NA AlixPartners New York
Counsel to
WHP Global
Joshua A. Feltman

Benjamin S. Arfa
Lipton, Rosen
& Katz
New York
Financial Advisor
to WHP Global
NA PJT Partners New York
Counsel to Brookfield NA Kelley Drye
& Warren
New York
Counsel to
Tanger Management
Curtis S. Miller Morris Nichols Wilmington, Del.
Counsel to
WPG Legacy
Ronald E. Gold

Erin P. Severini
Frost Brown Todd Cincinnati
Counsel to
PREIT Services
Jeffrey Kurtzman Kurtzman | Steady Margate, N.J.
U.S. Trustee John Schanne Office of the
U.S. Trustee
Wilmington, Del.
Debtors’ Claims Agent Sheryl Betance Stretto Irvine, Calif.

DIP Financing Motion / Term Sheet

The debtors request approval of DIP financing, according to a DIP term sheet, consisting of a $160.8 million senior secured superpriority first lien DIP ABL facility and $25 million senior secured superpriority second lien DIP term facility. According to the DIP financing motion, “[S]ubject to entry of the Final Order, the DIP Facilities will be used to roll up to $163 million of the Debtors’ prepetition debt under the Prepetition ABL Facility, and up to $63 under the Prepetition FILO Term Loan Facility in the aggregate,” plus “approximately $36 million of loans under the Prepetition FILO Term Loan Facility would be rolled upon entry of the Interim Order, and the remainder would be rolled up upon entry of the Final Order.”

Wells Fargo Bank is the first lien DIP ABL agent, and Wells Fargo Bank, Bank of America, Fifth Third Bank NA and U.S. Bank are the lenders. ReStore Capital LLC is the second lien DIP term agent, and the lenders are ReStore Capital (EXPRS-II) LLC, 1903 Partners LLC and First Eagle Alternative Credit LLC.

The debtors request approval of $224 million in DIP revolving and term loan credit facilities, including $25 million in second lien new-money term loans and a rollup of (i) approximately $136 million in prepetition obligations under their prepetition ABL facility and (ii) approximately $63 million in prepetition obligations under the prepetition first-in last-out, or FILO, term loan facility.

The first lien DIP ABL facility bears interest at “Adjusted Term SOFR” plus 4.25%, the second lien new-money DIP term loan bears interest at “Adjusted Term SOFR” plus 11.5%, and the balance of the second lien DIP term loan bears interest at “Adjusted Term SOFR” plus 13%. “Interest on the First Lien DIP ABL Facility and the balance of the Second Lien DIP Term Loan is based on the interest rates under the Prepetition Credit Agreements plus the Default Rate (2.0% and 3.0%, respectively).”

The loan matures on the earlier of 120 days after the petition date or other customary events.

To proposed lien and superpriority claim priorities are as follows:

The facility includes a 1% closing fee of the maximum revolving amount due the first lien DIP ABL agent and a 3.75% closing fee on the second lien new-money DIP term loans.

In support of the proposed DIP financing, the debtors filed the declaration of Kunal Kamlani of M3 Advisory Partners, the debtors’ proposed financial advisor, who says that prepetition, outstanding accounts payable rose at a “significant rate, resulting in vendors threatening to cut off inventory supplies.” Due to the outstanding accounts payable and deferred and defaulted rent payments, the debtors’ FILO lenders imposed $20 million of additional borrowing base reserves.

In addition, the ABL agent on March 28 notified the debtors that a cash dominion period occurred and that related measures would be implemented. Further, the debtors’ appraiser issued a lower inventory appraisal resulting in a reduction in its net orderly liquidation value, which led to further liquidity tightening.

A week before the petition date, the FILO lenders sent the debtors another notice that an additional reserve of $15 million would be imposed. Kamlani says that the debtors “require both, an injection of $25 million in new money term loans, along with a maximum revolving credit amount of $116 million under its First Lien DIP ABL Facility to ensure that the Debtors have the necessary liquidity to continue seamless operation of the Debtors’ business, facilitate the marketing and sale of the Debtors’ business and/or assets, and fund the administrative costs of the chapter 11 process.”

The debtors also submitted the declaration of Adam Keil of Moelis, the debtors’ proposed financial advisor and investment banker, who states that Moelis engaged with existing lenders, equity sponsor WHP Global and seven additional third parties and lenders on potential DIP financing. “Although the Debtors tirelessly pursued a deal with the ABL Lenders and WHP in the days leading up to the Petition Date, the Debtors were unable to agree with the ABL Lenders and WHP on a number of material terms,” the debtors say, adding that they “do not believe the joint proposal from the ABL Lenders and WHP was actionable, and instead the DIP Facilities are the best and only option available to the Debtors.”

The company proposes the following adequate protection to its prepetition lenders: replacement liens, allowed superpriority administrative expense claims, liens on avoidance actions (upon entry of final order) and payment of the professionals’ fees and expenses.

In addition, the debtors propose, subject to the final order, a waiver of the estates’ right to seek to surcharge its collateral pursuant to Bankruptcy Code section 506(c) and the “equities of the case” exception under section 552(b).

The carve-out for professional fees is $500,000.

The proposed budget for the use of the DIP facility is HERE and available in excel HERE.

The DIP financing is subject to the following milestones:

  • April 23:

    • Motion to approve store closings; and

    • Bid procedures motion for a going-concern sale of substantially all of the remaining stores and, in the alternative, orderly liquidation of all of the company’s assets, including an “entire chain liquidation” of all stores or assets.

  • April 25:

    • Entry of store closing interim order, which would include approval for the store closing; and

    • Entry of interim DIP order.

  • May 22:

    • Entry of final DIP order;

    • Entry of bid procedures order; and

    • Entry into either:

      • A stalking horse purchase agreement for a going-concern sale that has no financing or due diligence outs; or

      • A stalking horse purchase agreement for a liquidation, either through a fee deal or equity deal.

If the debtors pursue a going-concern sale, the following milestones apply:

  • May 23: File purchase agreement;

  • June 3:

    • Bid deadline; and

    • Final store list for going-concern sale.

  • June 5: Auction; and

  • June 7: Entry of going-concern sale order.

If the debtors pursue a liquidation, the following additional milestones apply:

  • May 24: Bid deadline for liquidation;

  • May 28: Auction date for liquidation;

  • May 30: Entry of order approving liquidating bid; and

  • May 31: Commencement of liquidation.

The lien challenge deadline is 60 days after formation of an official committee of unsecured creditors if appointed, or 75 days after entry of the interim order if no committee is appointed. The UCC lien investigation budget is “$[50,000].”

Store Closing Sale Motion

The debtors seek authority to run closing sales at 95 stores (as listed HERE) through Hilco Merchant Resources LLC, which has been working with the debtors for more than five years. Hilco would be entitled to a base fee of 2% of net sales, plus an incentive fee of 0.25% of net sales (calculated back to first dollar) to the extent that net sales increase by 90% over last year’s net sales at the same stores. The debtors also contemplate potentially closing additional stores. The initial store closing sales are projected to be complete by June 30.

The debtors also request authority to pay store closing bonuses for store-level non-insider employees that remain employed during the sales, in the form of a one-time payment to be paid on the employee’s last paycheck after a store closes. The proposed amounts are $300 for a sales leader or lead guide, $500 for an associate or assistant manager and $1,000 for a store or guideshop manager. At current store closings, the bonuses would not exceed $700,000 in the aggregate. If the debtors were to close all stores, the aggregate bonuses would not exceed approximately $5 million.

The debtors would no longer accept gift cards on their e-commerce site as of the petition date but would accept gift cards at closing stores for the first 30 days of the sales.

The debtors say that they have negotiated with the DIP lenders to make funds available to pay costs associated with any notices issued under the Worker Adjustment and Retraining Notification Act.

Other Motions

The debtors also filed various standard first day motions, including the following:

  • Motion for joint administration

    • The cases will be jointly administered under case No. 24-10831.

  • Motion to establish trading procedures

    • Express Inc. seeks to establish trading procedures for its common stock in order to be able to object to and prevent transfers if necessary to preserve net operating losses. The debtors have about $128 million in NOLs, $20 million of 163(j) carryforwards, $314,225 of foreign tax credit carryforwards and $935,000 of general business credits as of Feb. 3.

  • Motion to pay employee wages and benefits

    • The debtors seek authority to pay the following in prepetition wages and benefits:


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