Reuters
August 14, 2020
As retailers continue to file for Chapter 11 in droves, the Virginia court where many of them are seeking relief is joining the ranks of the most popular jurisdictions for large business bankruptcies, alongside New York, Delaware and Houston.
The Richmond branch of the U.S. Bankruptcy Court for the Eastern District of Virginia has become a hot spot for financially strapped retailers, including J. Crew, Lord & Taylor, Ann Taylor’s parent company, Ascena Retail Group, and Pier 1 Imports. The sudden uptick may be due in part to an April ruling from U.S. Bankruptcy Judge Kevin Huennekens in that case that permitted Pier 1 to put rent payments on hold, restructuring experts say.
“It was kind of novel and not the kind of thing you see every day because usually the expectation is if a debtor is utilizing the leased space in the ordinary course, it’s supposed to stay current on its rent,” said Zev Shechtman, a restructuring partner at Danning Gill. “So we see a trend of a debtor-friendly judge willing to stretch out the landlords.”
U.S. bankruptcy law offers Chapter 11 debtors leeway in determining where they will file for bankruptcy. Debtors are not required to file where they are headquartered or incorporated and can opt for a district where they have assets or a subsidiary. And, legislation to narrow bankruptcy venue options has failed to gain much traction.
To read the full article, click here.