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United Department Store, founded in 1929, is a large department store retailer located in Cincinnati.

United Department Store

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United Department Store, founded in 1929, is a large department store retailer located in Cincinnati.

company name

United Department Store

Foreign name

Federated Department Stores, Inc

headquarter address

Cincinnati

Established

1929

Founded in 1929 and headquartered in Cincinnati, Federated Department Stores, Inc. has 460 stores in 34 states, Guam and Puerto Rico, and is one of the leading large department store retailers in the United States. At the time, it was a merger of retail companies such as Abraham & Straus and F & R Lazarus (along with its Cincinnati-based subsidiary, Shillito's) and Filene's of Boston. Corporate offices established in Columbus, Ohio. ^[1]

Federated Department Stores: Sell merchandise based on a flexible infrastructure powered by IBM. ^[1]

United Department Store is a large retail enterprise group. In the mid-1970s, it had 262 branches in the United States, including discount malls, supermarkets, and leading department stores. In 1975, the turnover was US $ 3.7 billion and the profit was more than US $ 150 million. It has survived crises and gradually matured and stabilized. ^[1]

Macy's is one of the largest retail groups in the United States, with 111 department stores and 84 specialty stores, with annual sales of up to $ 6 billion. ^[2]

Messi's development was mainly carried out through debt acquisitions. In 1986, Messi borrowed $ 3.6 billion and acquired dozens of chain stores through leveraged buyouts. In 1988, Macy's spent 1.1 billion U.S. dollars to buy the two department stores "IMagnin" and "Bullock-S 'from Union Department Store. Although Macy's quickly expanded its scale through debt management, it assumed huge debt The problem laid the groundwork for bankruptcy.

Macy's had a period of rapid development after the large-scale acquisition in the 1980s, but due to the extremely bleak sales in 1990 and 1991, coupled with borrowing too much debt in leveraged buyouts, Macy's The company's capital turnover has encountered great difficulties. On May 10, 1991, Macy's sold its subsidiary credit card agency for $ 1.4 billion, but it still did not help.

On January 27, 1992, Macy's and its nine subsidiaries filed for bankruptcy in accordance with the relevant provisions of Chapter 11 of the US Bankruptcy Law. Four days later, another 78 subsidiaries also filed for bankruptcy.

United Department Store is also one of the largest retailers in the United States, but due to various business problems, the company filed for bankruptcy in 1988 in accordance with the relevant provisions of Chapter 11 of the Bankruptcy Law. United Department Store then hired WassersteinPerella & Company as a financial adviser for asset restructuring. With the efforts of the intermediary agency, Canadian real estate king ROBEDRT COMQEAU eventually acquired United Department Store and another department store ALLIED STORES CORPORATION. The merged company will continue to retain the name of United Department Store, but some chain department stores under the original United Department Store were sold. In exchange for cash to cover debt. After several years of efforts, the operation of United Department Store was back on track and was quite profitable. The management of United Department Store also tried to expand the scale of operations through mergers and acquisitions, and set the acquisition target at this time with a "revenge" Massey company.

In January 1994, United Department Store acquired Macy's approximately US $ 1 billion in secured claims and became Macy's main creditor. At the time, Potevio was the largest secured creditor of Macy's. Lianhe Department Store bought Macy's US $ 500 million secured claims from Putian Shou, and also bought US $ 500 million of Putian's purchase rights of Macy's secured claims.

After buying Macy's debt, United Department Store proposed a merger of Macy's and an asset reorganization plan.

Bankruptcy Liquidation and Restructuring

Because Macy's bankruptcy and asset reorganization are handled in accordance with the relevant provisions of Chapter 11 of the US Bankruptcy Law, it is necessary to briefly explain the legal concepts and procedures involved before analyzing the specific reorganization process.

When it comes to solving corporate bankruptcy issues, the United States has relatively sound bankruptcy laws and law enforcement agencies. It has clear legal procedures when dealing with corporate bankruptcies, and through the coordination of special federal courts, it is not a compulsory solution to find the existing effects of bankruptcy businesses.

In the United States, businesses can be liquidated or reorganized under bankruptcy law. At the time of liquidation, the court appoints the receiver or entrusted administrator. These people take over the business and sell the business itself or property as early as possible, and pay the realised assets to creditors in order of priority. However, the main principle of the US bankruptcy law is not based on liquidation, but on reorganization, in order to maximize the protection of creditors' interests and avoid possible economic losses caused by liquidation. The first principle is concentrated in the first chapter of the bankruptcy law. The relevant provisions of Chapter 11.

First, Chapter 11 stipulates that a bankrupt enterprise can continue to operate automatically. At this time, the bankrupt enterprise is also referred to as a holding debtor. The above clauses provide necessary opportunities for enterprises to stabilize their business, re-examine the feasibility of transformation and conversion, and reorganize capital.

Second, when restructuring, an enterprise should identify all claims for compensation to the enterprise and initially determine the creditor's priority before applying for bankruptcy proceedings.

Third, the holding debtor may not pay interest before re-signing the contract, but it is necessary to provide financial reports to creditors and the court so that people can understand the financial status of the enterprise.

Fourth, a creditor committee is formed to negotiate an asset restructuring plan.

On January 29, 1992, Macy's raised $ 600 million as a debt holder and was able to continue its business during the Chapter 11 case.

The bankruptcy court set December 15, 1992, as the deadline for filing claims on Macy's remaining property, with a total of 14,000 claims at that time, for a total amount of $ 18.8 billion. Massey asked the court to dismiss or remove many of its debt claims. As of October 21, 1994, Messi successfully denied about $ 4 billion in debt claims. The court finally determined that Messi's debt was $ 4.8 billion.

United Department Stores used its investment in Macy's secured debt to negotiate with other Macy's creditors and proposed an asset restructuring plan. United's plan was supported by a creditors committee. But Macy's firmly opposed United's plan.

Lionel Messi, especially the chairman Myron E. In order to protect its own interests, UIIman3d also proposed a corresponding asset reorganization plan. Macy's valued the company at $ 3.6 billion. If the stock price rises later, the creditors will receive an additional $ 500 million in compensation.

There are two focus issues in the dispute between the merger and acquisition parties over the asset reorganization plan:

First, whether Macy's accepts the acquisition plan of United Department Store. At that time, in addition to United Department Store's proposed acquisition, several other companies also proposed the acquisition of Macy's. Of the 11 directors of Macy's, five directors supported UIIman, but the other directors were at Laurence A. Tixch's leadership adheres to Massey's asset restructuring plan. Tixch was then chairman of the board of CBS Broadcasting Network. Eventually, Macy's main creditors eventually turned to support United and I. A. Tixch, therefore Macy's was forced to accept the United Department Store acquisition plan.

Second, the value of Messi's assets. Because this valuation involves compensation to creditors, it is of particular concern to all parties. Due to the trade-offs of their own interests, different interest groups have proposed widely differing valuation schemes. Bondholders value Macy's assets at $ 3.2 billion to $ 3.3 billion. The bondholders proposed a higher valuation in order to obtain greater compensation during liquidation or reorganization. It can also be seen that Messi's good intentions are neither willing to overvalue, but letting bondholders Make a profit, unwilling to undervalue, let United Department Store purchase at a low price.

In the Macy's bankruptcy and reorganization case, Macy's hired a well-known American law firm Weil Gotshal & Manges as its legal adviser. HarveyR. Miller, but the law firm is also the legal adviser to Massey's important creditor Fedelity lnuestmentsr, so its neutrality and objectivity have been criticized by Massey's creditors and public opinion.

Macy's corporate bondholders have hired Berlaek Israels & Librman Law Firm as their adviser, and Robert M. Duty, a lawyer on duty. Miller and Bsto J. Mattes challenged the issue in court. This dispute was finally decided by the judge Burton R. Lifland mediation was suspended.

On February 22, 1994, the US Bankruptcy Court appointed former US Secretary of State Vance as the mediator to coordinate the dispute between Macy's and United Department Store.

After months of negotiations between United Department Store, Macy's, the Creditors' Committee, and Macy's secured creditors, the parties finally agreed on a comprehensive United-Macy's reorganization plan, which stipulated that United Department Store and Macy's cooperate with Cash, bonds and stock were distributed to Macy's creditors for $ 4.1 billion in assets.

In December 1994, the United States Bankruptcy Court approved the reorganization plan of United Department Store. The main contents of the program are:

First, Messi's liabilities and other claims are approximately $ 4.8 billion;

Second, United Department Store paid these debts to creditors with US $ 378 million in cash, US $ 1.945 billion in newly issued debt, and US $ 1.8 billion in equity in Macy's.

Third, the original shareholders of Macy's have no right to participate in this asset reorganization.

Fourth, after the acquisition of Macy's, United Department Store will sell or close several competing stores and may fire a large number of employees.

Messi's asset reorganization plan has proved to be a very successful plan afterwards, the most prominent manifestation of which is the positive effect on the asset price of creditors after the implementation of the plan. Creditor asset prices have increased to a certain extent, with a maximum increase of 114% and a minimum increase of 12%. This has alleviated the pressure on Macy's to pay, and on the other hand has created a more accommodative financing activity for the company. Background.

At the same time, the business development of United Department Store and Macy's has also been relatively rapid, avoiding the adverse impact of the bankruptcy and business reorganization on the company, which also allows asset reorganization to be superior to bankruptcy liquidation under possible conditions, which is a unique property right constraint in China Asset restructuring may be a more acceptable way for problematic companies.

In short, Messi's asset reorganization is a typical case in corporate asset reorganization in western countries. By analyzing and studying this case, you can better master merger and acquisition technologies and strategies, and prepare for the future intermediary planning of domestic corporate asset reorganization. .