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The Retail Industry’s Lessons in Resilience

Pressures Continue to Grow in the Ag, Logistics Industries

In this month’s issue of the Journal of Corporate Renewal, we turn to the retail industry. Over the past year, we saw the COVID-19 pandemic not only create new challenges for the industry but also exacerbate existing industry headwinds and shifting consumer habits. The upshot is that we saw the resilience of the industry as it adapted to this new normal in inventive ways.

However, as we look forward to a post-COVID era with the recent wide distribution of a vaccine and easing of pandemic restrictions, it remains to be seen whether and how the pandemic’s effect on consumer behavior will persist.

This issue provides insight on challenges brought to the fore by the pandemic, strategies and solutions to help retailers navigate the changing landscape, and what may lie ahead in a post-COVID world. We begin with Mark E. Gallivan and Michael D. Sullivan of Second Avenue Capital Partners, who look at the new consumer behaviors and retail adaptations in response to the COVID-19 pandemic. They cover the risks and opportunities these new behaviors and adaptations create for retailers and their lenders as the world enters the post-COVID era.

Seth Jacobson, Shana Elberg, and Robert Fitzgerald of Skadden, Arps, Slate, Meagher & Flom LLP focus on the unique challenges facing retailers attempting to restructure out of court. They review various issues restructuring advisors should evaluate and strategies to help retailers navigate the challenges of an out-of-court restructuring.

Denise Kaloudis of Stretto and Matthew Fagen of Kirkland & Ellis highlight the successful outcome of the recent Neiman Marcus case as an example of corporate restructuring as a solution allowing retailers to shed debt and raise new liquidity while maintaining a brick-and-mortar presence. They examine the various lessons of Neiman Marcus that likely led to the case's phenomenal outcome.

Next, we head to the theaters, where Brad Young, Kate Schrichte, and Aashish Chaturvedi of AlixPartners look at changing consumer habits that have challenged the exhibitor industry, which effects have been exacerbated by the COVID-19 pandemic. They outline near-term measures exhibitors can implement to transform and optimize their business for a new era of content consumption.

We move overseas, where Damian Webb of RSM Restructuring Advisory LLP covers the relationship between retail tenants and landlords that is influencing UK restructuring processes. The article examines the dynamic of such relationship that may drive retailers to prefer a U.S. Chapter 11-style process over the traditional Company Voluntary Arrangement.

Finally, returning to the States, Liz (Ji Yon) Park of FTI Consulting and Maja Zerjal Fink of Arnold & Porter Kaye Scholer LLP analyze the trend of landlords who have forayed into retail by purchasing their distressed retail tenants. They note the unique partnerships landlords have created to operate these retail businesses.

Steve Ma

Steve Ma

Proskauer’s Business Solutions

Steve Ma is an associate in Proskauer’s Business Solutions, Governance, Restructuring & Bankruptcy group, resident in the Los Angeles office. Ma’s practice focuses on the representation of debtors, creditors, statutory and ad hoc committees, and equity holders in Chapter 11 cases and out-of-court restructurings across a variety of industries.

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