National Stores Case Shines Spotlight on Bailment

The Deal

"The interplay of vendors and bankrupt retailers isn't always straightforward. While vendors are often supportive of retailers that hit Chapter 11, they also don't want to continue to ship goods and end up with partial payment for the merchandise. Over 200 retailers filed for bankruptcy in 2018, and many others, such as Stein Mart, 99 Cents Only Stores, Neiman Marcus Group and J.C. Penney Co., have been restructuring out of court seeking to avoid a Chapter 11 filing. But what can these retailers do for their vendors to keep them shipping goods if the companies are forced to file for Chapter 11? Once a retailer enters bankruptcy, it needs to find ways to reassure vendors that shipping products is not a lost cause and convince them they will get paid for their goods as the company reorganizes."

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Related Contacts
Jay Indyke Partner, New York