Fox Successfully Represents the Official Committee of Unsecured Creditors in the Bankruptcy Case of One of the Country’s Largest Christian RetailersAugust 13, 2015 – Press Releases
Fox Rothschild LLP Partners Michael G. Menkowitz and Paul J. Labov recently represented the Official Committee of Unsecured Creditors in the bankruptcy of Family Christian Stores and successfully kept the retail chain open, saving thousands of jobs across the country.
The Debtors and affiliated entities in the case are one of the country's largest retailers of faith-based music, books and other merchandise, with a national footprint and approximately 300 retail locations. Upon filing for bankruptcy in February, out of the Western District of Michigan, the Debtors had approximately $60M in secured debt and $60M in unsecured debt and potential consignment claims.
Immediately upon being appointed to represent the Committee of Unsecured Creditors, Fox’s team investigated potential claims against various insiders who had positions at the debtor, secured lender and potential buyer constituencies.
With Fox’s guidance, the Debtors reorganized through the sale of their assets to an affiliated entity, preventing the purchase of the Debtors’ assets and the closing of the company by a liquidator. Originally conceived as a quick sale to insiders, the Committee was able to slow the sales process down and oversee a robust and clean marketing process. In doing so, the Debtors were able to focus on trimming their capital structure, which eventually led to a buy-out of the second lien debt at an almost 80 percent discount.
Fox was integral in strategizing and drafting the eventual reorganization plan, thereby maintaining thousands of jobs at the company level and providing a large and important customer for the Debtors vendors.
Menkowitz, immediate past chair of the firm’s Financial Restructuring & Bankruptcy Department and current Philadelphia office managing partner, has represented secured and unsecured creditors, creditors’ committees, trustees and debtors in a multitude of workout and bankruptcy matters, including complex chapter 7 and 11 cases. He is experienced in a variety of industries including health care, retail, manufacturing, financial services, automotive and others.
Labov focuses his practice on creditor-side representation in both national and international bankruptcy proceedings. He frequently counsels hedge funds, insurance companies and commercial banking institutions with respect to the purchase of assets out of bankruptcy, debtor-in-possession financing, claims trading, intellectual property, real estate, derivatives and the treatment of other financial instruments in bankruptcy. Additionally, Labov represents Chapter 11 trustees in all aspects of corporate debtors’ estates.