Tue 01/26/2021 08:23 AM
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Relevant Documents:
Voluntary Petition
First Day Declaration

L’Occitane, a New York-based national retail chain that sells beauty and well-being products through stores in 36 states and its website, filed for chapter 11 protection early this morning in the Bankruptcy Court for the District of New Jersey. The company reports $100 million to $500 million in both assets and liabilities. The debtor is represented by Fox Rothschild in Morristown, N.J. as counsel, RK Consultants as financial advisor and Hilco Real Estate as real estate consultants. Stretto is the claims agent. The case number is 21-10632. The case has been assigned to Judge Michael B. Kaplan. Continue reading for our First Day team's filing alert of the L’Occitane chapter 11 filing and Request a Trial for access to the linked documents and analysis as well as our coverage of all U.S. chapter 11 cases filed since 2012 with over $10 million in liabilities.

“Like most retailers in the United States, the Debtor has been impacted by the Covid-19 pandemic,” according to the first day declaration of Yann Tanini, the regional managing director of the company. Tanini continues that even before the pandemic the company had declining sales from its brick-and-mortar stores but was unsuccessful in negotiating with its landlords the “type of long-term adjustments to leases that are necessary to ensure the Debtor’s continued viability.” The debtor says it intends to reject certain leases to “right-size” its store footprint to “better position itself for long-term success.” The debtor initially seeks to close and reject the leases for 23 locations.

The debtor has $161.1 million in assets and $161.7 million in liabilities. The debtor’s parent, L’Occitane International, which is organized under the laws of Luxembourg and headquartered in Switzerland, has not filed for bankruptcy. “Outside of equipment financing, the Debtor’s assets are not encumbered by or otherwise subject to any to liens or secured obligations,” the first day declaration says, and other than sales revenue, its “chief financing source” is the parent company which has provided periodic unsecured loans. The parent company is “by far” the debtor’s largest unsecured creditor, owed $26 million related to loans plus $4.5 million for inventory, for a total liability of $30.5 million. The debtor also has executed letters of credit backed by Crédit Industriel et Commercial in favor of certain landlords in the aggregate amount of approximately $1.8 million.

Other than the claim of the parent, the debtor’s “largest liability” is to landlords as it leases all of its 166 locations, plus its corporate offices and distribution center. As of the petition date, the aggregate amount of annual and monthly gross rent due to landlords on all leases is approximately $30.3 million and $2.5 million, respectively. As of Dec. 31, 2020, the debtor’s total remaining lease obligations under the terms of its current leases is approximately $112.8 million. The debtor is currently $15.1 million in arrears on its leases.

The list of largest unsecured creditors consists almost entirely of rent claims.

Reorg First Day will provide a full summary once the first day briefing is complete.
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