Payless Shoes = "Successful" Reorganization?

Everything is Relative

Everything is relative. Apparently, as we noted above, Payless Shoesource set the bar for what constitutes a "successful reorganization": not liquidating. We think there should be a tail or clawback for such labels given the state of retail these days and the seemingly strong likelihood of retail Chapter 22s. Apropos, Payless is taking "additional steps" to sure up its footing, which apparently includes "a significant workforce downsizing to occur this week." While stores may be open, (some) jobs preserved and tax revenue maintained (assuming the company doesn't just accumulate net operating losses), this news probably doesn't sound all too "successful" to those employees who now look like they're going to have a rough holiday season. Like we said, everything is relative: what may have been a "successful reorganization" to those lawyers touting as much in court looks entirely different to those who are now worried about Christmas.

Bloomberg Finds Chapter 22s "Enticing"

Ah, Poor Headlines...

Bloomberg is getting a little lax here with this headline, "Filing 'Chapter 22' Becomes Enticing Option for Ailing Retailers." We get what they're TRYING to say here which is that restructuring retail right now is really tough. And that a number of retailers, e.g., Wet SealAmerican ApparelGeneral Wireless & Eastern Outfitters, have filed for bankruptcy twice in a short time span. Get it? Chapter 11 + Chapter 11 = Chapter 22. So creative these restructuring folk. Anyway, we've highlighted this issue too (see "Rewind II" here). But to suggest that filing a 22 is "enticing" is a bit of a stretch, yeah? All four of those businesses are effectively gone now and a lot of investor money was lost along the way: not much "enticing" about any of that. But they make tons of money and we do a free newsletter so what the hell do we know? P.S. the article short-changed the industry-agnostic, cough, appeal, of a chapter 22: it neglected to mention Venoco LLC and the possibility of a few solid oil and gas 22s to come. 

When Do the Oil & Gas Chapter 22s Start?

Texas oil bankruptcies down to a trickle. Speaking of down, oil prices as rig counts increase - even with a 1.6% turnaround on Friday. Cue the Chapter 22s. In tandem, there appears to be a rise in M&A activity out of post-reorg E&P companies including Linn Energy. This bucks the overall M&A trend which, according to this, is at its slowest global pace in 20 years.