More Retailers Are Expected to File Bankruptcy, According to DailyDAC Survey. Are You an Opportunistic Investor or Strategic Buyer?

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Thanksgiving is coming soon; look for more Chapter 11s and/or distressed opportunities in the retail sector. Most of these situations involve asset sales that will not necessarily be well marketed. DailyDAC provides buyers with the information they need to buy troubled companies or their assets.

Retail is all about the season. The recovery value on inventory can be well over 120% of cost in November versus, say 85%, in January."

- Jacen Dinoff, KCP Advisory.

Thanksgiving is almost upon us. For most Americans and the retailers who sell to them, this also means that the holiday shopping season is almost upon us. For bankruptcy attorneys, investment bankers, and other professionals who operate in the financially troubled world, it is also the beginning of “retailer bankruptcy season.”

As those in the “know” know, large retailers, the banks and non-traditional groups that lend to them, and the professionals that serve these constituencies, tend to favor chapter 11 bankruptcy as the best vehicle by which to close down and sell their operations. And, they tend to do so this time of year.

According to Jacen Dinoff of KCP Advisory, who has worked on distressed retail companies as a lender and financial advisor more than a decade, says the reasons for this are clear: “Retail is all about the season. The recovery value on inventory can be well over 120% of cost in November versus, say 85%, in January”. He further adds “Its all about the so-called velocity of traffic in the location versus the cost of payroll and occupancy. When your job is to maximize the recovery on the assets, without interference from creditors and landlords, this is the time – when they are at their peak and bankruptcy is the preference”.

Perhaps this is why Syms and Filenes filed when they did. In any event, selling the company, whether as a going concern or in pieces, has been the MO for most retailers. “Borders, for example, filed with the ostensible purpose of liquidating,” points out Kristen Weber, a managing director with DailyDAC, LLC, “but quickly became a liquidation.” Other companies, like Syms and Filene’s Basement, file for the stated purpose of selling their assets.

Large, household brands will get plenty of attention. But what about smaller “mom and pop” businesses? Smaller businesses often file bankruptcy or otherwise have to be sold for pennies on the dollar in ways that can escape public scrutiny. “If you don’t know about it, you cannot bid on it,” according to Weber, “we started the website to be the definitive source for people looking to buy troubled businesses or their assets.”

More About DailyDAC:

DailyDAC is a subscription-based deal aggregator focused on lower middle market, time sensitive situations. DailyDAC provides subscribers with opportunities to purchase or provide capital to non-public companies and/or their assets.

By culling information from thousands of public sources and cultivating relationships with hundreds of professionals, DailyDAC locates deals involving: stressed and distressed companies, including those in bankruptcy, receivership and assignment; owners who must sell for personal reasons; and start-up companies looking for capital quickly.

DailyDAC charges no finders’ fees or commissions. For more information, go to http://www.dailydac.com and opt in to receive the non-actionable version of DailyDAC’s electronic newsletter.

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Kristen Weber
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