July 14, 2020
A recent Law.com story by Samantha Stokes, “Kirkland Sees More Restructuring Fees With Latest Retailer Bankruptcies” reports that the restructuring department at Kirkland & Ellis just got busier with the Chapter 11 filings Aug. 2 of two more retailers, Lord & Taylor and Tailored Brands. Lord & Taylor, the country’s oldest department store, filed for Chapter 11 protection in the Eastern District of Virginia. In court paperwork, it said it owed between $100 million and $500 million to between 200 and 299 creditors. Tailored Brands, which owns clothiers Men’s Wearhouse and Jos. A. Bank, filed Chapter 11 paperwork hours later in the Southern District of Texas. The company said it owed between $1 billion and $10 billion to between 25,000 and 50,000 creditors.
Kirkland is representing both companies in court proceedings, while Kutak Rock is local counsel for Lord & Taylor in Virginia, and Jackson Walker is local counsel for Tailored Brands in Texas. There are no law firms among either company’s 30 largest unsecured creditors. Partners Joshua Sussberg, Christopher Marcus, Aparna Yenamandra and James Sprayregen are leading the Kirkland team for Tailored Brands. Court filings as of Monday afternoon didn’t yet reveal the Kirkland lawyers working on the Lord & Taylor case.
Lord & Taylor and Tailored Brands are only the latest victims of the coronavirus pandemic’s devastating effect on the economy, which has sent several struggling retailers into bankruptcy since early May. In many cases, Kirkland has been behind the scenes helping them restructure their debts. Kirkland is also advising Neiman Marcus and J.C. Penney through their Chapter 11 proceedings.
A large bankruptcy can generate tens of millions of dollars in fees for the firms lucky enough to land work on the case. Kirkland, which secured $56 million in fees last year for leading Toys “R” Us through bankruptcy, generated $25 million in advance payments from Neiman Marcus and J. C. Penney. Both the Lord & Taylor and Tailored Brands court proceedings will likely generate hefty fees for Kirkland, whose lawyers charge a premium. Top billing partners and of counsel at Kirkland are charging up to $1,845 an hour, while top billing associates are charging up to $1,165. The firm requested nearly $2.5 million in attorney fees for work done for Neiman Marcus in May, according to its first monthly billing statement.
As of March, Sussberg billed $1,635 an hour, according to the final fee application in the Barneys New York bankruptcy. Although Kirkland has landed roles on multiple of the pandemic-era bankruptcies, some companies have turned to rival firms for restructuring work. Weil, Gotshal & Manges is handling the J.Crew and Brooks Brothers bankruptcies, Latham & Watkins is advising health retailer GNC, and Haynes and Boone is leading discount retailer Tuesday Morning through Chapter 11 proceedings.