California-based Tailored Brands, the parent company of Men’s Wearhouse and Jos. A Bank, filed for bankruptcy protection in Houston federal court Sunday night, the latest retailer to fall victim to COVID-19’s economic hardships.
Hours later, Houston Jackson Walker partner Matthew Cavenaugh, who filed Tailored Brand’s voluntary petition, submitted a new Chapter 11 case on behalf of Benevis Corp., a national dental practice management services firm based in Georgia that has also struggled because of the pandemic. Both cases have landed in U.S. Bankruptcy Judge Marvin Isgur’s court.
According to Tailored Brands’ voluntary bankruptcy petition, which listed 17 affiliated companies as a part of the restructuring, the company hired Kirkland & Ellis and Jackson Walker as its legal counsel to guide it through its corporate reorganization. Canadian law firms Stikeman Elliott and Mourant Ozannes are also representing the debtor.
Other Jackson Walker lawyers representing the debtors in addition to Cavenaugh include Austin partner Jennifer Wertz and Houston associates Victoria Argeroplos and Cameron Secord. Kirkland’s team includes lawyers from the firm’s New York office.
Lawyers from Gibson, Dunn & Crutcher’s New York office are representing the ad hoc term loan lenders group. Local counsel for the ad hoc group are John Higgins and Aaron Power of Porter Hedges.
PJT Partners is serving as financial advisor, AlixPartners is serving as restructuring advisor, A&G Realty Partners as real estate consultants and advisor and Prime Clerk as notice and claims agent.
The company lists $2.48 billion in assets and $2.84 billion in debt.
The bankruptcy filing follows drastic operating and organizational changes that Tailored Brands announced two weeks ago as a result of business disruption and hardships caused by the coronavirus pandemic. Tailored Brands said it will lay off 20% of its workforce by the end of the fiscal second quarter, close up to 500 of its stores and bid farewell to Jack Calandra, the company’s chief financial officer. Calandra’s last day was July 31, and in the meantime, his role will be split by Tailored Brands CEO Dinesh Lathi and AlixPartners managing director Holly Etlin, who is serving as the company’s chief restructuring officer.
Tailored Brands operates 1,400 stores throughout the United States and Canada. In addition to Men’s Wearhouse and Jos A. Bank, Tailored Brands operates Men’s Wearhouse & Tux, K&G and Moores. The Vanguard Group owns 6.68% of the company.
Although Tailored Brands is based in California, the company has origins in Houston. Businessman George Zimmer opened the first Men’s Wearhouse store in a strip shopping center on the west side of Houston in 1973. He opened it with a $30,000 line of credit from his father, $7,000 of his own money and the help of a college friend. In the decade following, Zimmer opened one new store in the Houston area, and later, expanded across the U.S. Today, there are 58 Men’s Wearhouse stores in Texas.
Tailored Brands grew to the company it is today after acquiring K&G Men’s Superstore and Moores in 1999 and Jos. A. Bank in 2014.
Tailored Brands’ largest unsecured creditor is Bank of New York Mellon Trust for nearly $180 million worth of senior notes due 2022.
The case number is 20-33900 in the Houston division of the U.S. Bankruptcy Court for the Southern District of Texas.
While Jackson Walker has recently been appearing new Houston bankruptcies as co-counsel to Kirkland, the Texas-based firm took the solo lead on behalf of Benevis on Monday.
Other Jackson Walker lawyers besides Cavenaugh on the bankruptcy include partner Elizabeth Freeman, senior counsel Genevieve Graham, and associates Veronica Polnick and Vienna Anaya. All lawyers are based in Houston except for Anaya, who is based in Dallas.
Benevis’ financial advisors are Conway Mackenzie and Lincoln International.
In a Monday morning press release, Benevis said that it filed for Chapter 11 with LT Smile Corp., Benevis Holding Corp. and other affiliates. Benevis said it filed for bankruptcy to assist with a sale of the business and to improve its balance sheet and operating position. None of the company’s supported dental practices are included in the reorganization, Benevis said.
Benevis provides nonclinical business support services to more than 150 dental offices in 16 states and the District of Columbia. The services include consulting, administrative, marketing, billing and collections and disbursements.
They’re also the national market leader in the “fragmented and underserved, $17 billion Medicaid pediatric dental services market,” according to an affidavit by Conway Mackenzie managing director Scott Mell, who is serving as the company’s chief restructuring officer.
The company has secured financing from its current lenders, including New Mountain Finance Corp. and several credit investing affiliates.
According to Benevis’ voluntary petition, the company has between $100 million and $500 million in debt and assets in the same range. Benevis estimates that it has between 1,000 and 5,000 creditors.
Other Texas attorneys who have appeared on the docket include Houston partner Joseph Bain of Jones Walker, who represents New Mountain Finance, and Houston partner Tara Grundemeier of Linebarger Goggan Blair & Sampson, who represents Cypress-Fairbanks Independent School District, which falls within Harris County.
The case number is 20-33918 in the Houston division of the U.S. Bankruptcy Court for the Southern District of Texas.