Simon Property Group is straight up not having a good time in court. The mall operator wants a judge to deny Ascena Retail Group’s Chapter 11 reorganization plan after its new private equity parent signaled intentions to close more Ascena stores than anticipated.
- To recap: In December, private equity firm Sycamore Partners completed a $540 million acquisition of Ascena brands, including Ann Taylor, Loft, Lou & Grey, and Lane Bryant.
Simon’s legal objection…stems from original plans to keep at least 900 stores operational, according to the asset purchase agreement signed last November.
- Sycamore plans to close 160 of 226 stores leased from Simon landlords—even some profitable ones.
- Simon believes the closures will diminish not only the profitability of Sycamore’s brick and mortar business but also e-commerce.
Another layer: Simon claims Sycamore has bankrupted a number of retailers it has owned, operated, or invested in, including Nine West Holdings, Belk, and Aéropostale, which Simon now owns.
- That hasn’t stopped Sycamore. The company has been active during the pandemic, cutting a term loan deal with fashion retailer Express to boost liquidity and selling women’s apparel retailer Coldwater Creek.
Zoom out: Sycamore’s cut-it-loose approach contrasts with Simon’s strategy of acquiring and reinventing fledgling retailers to keep them afloat. Simon has formed a SPAC seeking to raise $300 million in its IPO. Simon believes it can execute an acquisition with a like-minded company that would benefit from its expertise.
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