The Retail Apocalypse Claims Its Latest Chapter 11 Victim

Financial expert, Chuck Tatelbaum, is available for comment

Media contact: Maria Sliwa, CaptialHQ, msliwa@capitalhq.com202-750-1684

Bon-Ton Stores is Latest in Cascade of Retail Closings

With Sunday’s Chapter 11 filing for Bon-Ton Stores, the unfortunately anticipated cascade of retail closings and reorganizations is beginning to escalate.

Bon-Ton, like so many other retailers that incurred substantial amounts of seemingly low-interest debt either by way of a leveraged buyout or otherwise, has now found that when the maladies of brick and mortar retailing mixed with a large debt service, an explosive concoction is created.

The Bon-Ton Chapter 11 filing, while not unexpected, places at risk not only the vendors to the retailer, but also the landlords for the 42 stores that will be closed as well as the employees who, in today shrinking retail environment, may have no ready venue of replacement employment. The same is true for many struggling retailers, large and small.

With the announced closings of 180 Toys R Us stores and the uncertainty of its Chapter 11 prognosis plus the announced closing of a substantial number of Sam’s Club stores, the announced closing of Sears and Kmart locations, and the anticipated closings by other multiple sized retailers of their brick and mortar  retail outlets, as well as given the anticipated increase in interest by the Federal Reserve Board, shopping Center and mall owners may face a crisis with shrinking lease revenue, an increased proportion of common area charges, lower occupancy and traffic and a demand by lenders for additional collateral. All but the largest of mall operators will be susceptible to a possible catastrophe during 2018.

Although the new jobs reports coupled with the shrinking overall unemployment appears to create a positive continuing rebound for the economy, the shrinking opportunities for already poorly paid retail workers may dramatically change the employment outlook and statistics in coming months.

With the slowness in payment to vendors by retailers, many vendors are tightening terms of repayment in the upcoming months which will place additional stress on retailer when the shelves are becoming bare due to the lack of inventory availability.

Consumers are (and should be) wary of purchasing gift cards from distressed retailers, which will only exacerbate the lack of confidence by consumers in dealing with brick and mortar retailers.

Chuck Tatelbaum is a director with the Tripp Scott law firm.  For the past 50 years has focused his practice on bankruptcy and creditors’ rights issues, complex business litigation, Uniform Commercial Code transactions and lender liability litigation and other types of secured transactions, as well as domestic and international letters of credit. 

He regularly represents secured and unsecured creditors in transactions and insolvency situations, creditors’ committees, and throughout the United States he represents business clients in complex business litigation, the defense of lender liability claims, all types of bankruptcy proceedings and products liability defense based on warranty. He also represents secured and unsecured creditors in distressed business transactions and litigation. He has also has represented clients in Chapter 9 municipal bankruptcy proceedings and Chapter 15 foreign bankruptcy proceedings.

As an example, he represented the major motor vehicle floor plan lender in the largest motor vehicle dealer bankruptcy in U.S. history, recovering more than $150 million, which constituted payment in full of principal, interest, attorney fees and costs. In that case, the court awarded a $300,000 substantial contribution fee to the represented lender. As another example, he has represented the lender in the worldwide bankruptcy proceeding of Saab Automobiles, and was able to obtain payment in full of all principal, interest and attorneys’ fees. As of a result of his prior work with the U.S. State Department in eastern Europe to develop bankruptcy laws in Croatia and Slovakia, Mr. Tatelbaum has regularly handled business and insolvency issues that develop in foreign countries.

Recently, he completed a total revision of the purchase order terms and conditions and purchase agreement terms and conditions for one of the largest retailers in the United States utilizing provisions of Article 2 of the Uniform Commercial Code in order to provide maximum rights, remedies and benefits to the retailer as both a purchaser and seller of goods.

He is well versed in dealing with all aspects of domestic and international letters of credit from the transactional stage through litigation.

Besides being the author of numerous periodical publications over the last 50 years dealing with bankruptcy and complex litigation, Mr. Tatelbaum is author of "New Balance in the Rights of Creditors and Debtors: The Effect on Maryland Law," University of Baltimore Law Review, Spring, 1973; "The New Rules of Bankruptcy Procedure," Maryland Bar Journal, January and April 1974; "The Proposed Bankruptcy Re-Organizations," The Florida Bar Journal, August 1974; "The New Bankruptcy Code," Maryland Bar Journal Spring, 1979; Volumes on: Consumer Bankruptcies, 1974, Bankruptcy Code of 1978, 1979, 1980, Exercising a Judgment 1980, Maryland Institute for Continuing Professional Education, 1974-1986; National Conference of Bankruptcy Judges, 1989. Contributing Author: Collier's Practice Guide on Bankruptcy, 1981; Bankruptcy Practice and Strategy, Warren, Gormann & Lamont, 1987; Bankruptcy Code Manual, Commercial Law League of America, 1980, 1987 and 1995. Co-Author: NACM Bankruptcy Reorganization Guide, National Association of Credit Management, 1991; Bankruptcy Rules and Forms Handbook, 2 vols. Wiley Publishing, 1992. Columnist: "Business Credit," National Association of Credit Management, 1990-1999. Co-Editor, Credit Manual of Commercial Laws, National Association of Credit Management, 1993-2000 and is co-author of Creditors' Rights In Chapter 11 Cases - The Current State of Chapter 11 Cases: Trends in Pre-Bankruptcy Resolution and Chapter 11 Bankruptcy and Restructuring Strategies -The Past, Present, and Future of Chapter 11 Filings, published in 2016 by Aspatore. Mr. Tatelbaum regularly has artilces published on bankruptcty and creditors’ rights in the South Florida Daily Business Review as a member of its Board of Contributors.

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Maria Sliwa


New York, NY

973-272-2861 (call), 202-750-1684 (call and text)