good thing i got out with my severance in july =D
- NOVEMBER 18, 2008
In six months, Steve & Barry’s LLC went from a national retail phenomenon to a midsummer bankruptcy collapse to a new lease on life.
Now, fewer than three months after a private-equity firm and hedge fund acquired the discount clothing chain out of bankruptcy for $168 million, it stands on the brink of liquidation.
The 275-unit Port Washington, N.Y., chain, which gained national prominence with fashion lines by celebrities such as actress Sarah Jessica Parker and surfer Laird Hamilton, is set to announce this week it will go out of business, according to two people familiar with the situation.
Bay Harbour Management LC, the private-equity firm based in New York that acquired 175 of the stores, has hired a liquidation firm to handle the going-out-of-business sale for the chain. The roughly 5,000 employees will be let go.
The retailer joins a number of others that entered bankruptcy protection this year and planned to restructure but then liquidated amid a hostile consumer economy. Others such as Linens ‘N Things Inc. and Mervyns LLC also liquidated.
The difference with Steve & Barry’s is that the business had been purchased out of bankruptcy. When he acquired the company on Aug. 21, Bay Harbour managing principal Douglas Teitelbaum said “this company offers better value than I’ve seen anywhere.”
Mr. Teitelbaum said he was attracted to the company’s celebrity brands. A former junior tennis player, Mr. Teitelbaum expressed excitement that Venus Williams wore her Steve & Barry’s Eleven athleticwear line at Wimbledon this summer.
In mid-October Steve & Barry’s said it had hired Harold Kahn, who has been at the helm of retail chains such as Macy’s East, to run the revamped chain. Mr. Kahn is no longer with the company, according to a person familiar with the situation.
Steve & Barry’s implosion is a black eye for Bay Harbour, which has had success as a turnaround investor. The firm purchased Barneys New York out of bankruptcy in 1999.
New York hedge fund York Capital Management, which invested equity alongside Bay Harbour, also stands to lose its investment. Cerberus Capital Management LP, whose Ableco lending unit provided a loan to finance the deal, expects to be paid back in full, according to people familiar with the deal.
A spokesman for Steve & Barry’s didn’t return emails seeking comment.