Keith Markel, David J. Kozlowski and Alana Mildner Smolow Share Strategies for Navigating Fashion and Retail Bankruptcies in Global Legal Post
Morrison Cohen Partner Keith Markel, chair of the Labor & Employment Practice and co-chair of the Luxury Brands Group, Labor & Employment Counsel Alana Mildner Smolow and Bankruptcy, Restructuring & Governance Partner David Kozlowski recently published “Before the Doors Close: Helping Distressed Fashion Retailers Avoid Costly Mistakes During Difficult Times,” in The Global Legal Post.
With iconic names like Express, Hudson’s Bay and Forever 21 along with many others facing financial distress, retailers are grappling with store closures, layoffs and restructuring. While some of the most complex and emotionally charged decisions involve employees, the authors stress that workforce issues must be integrated with the broader bankruptcy and distress strategies in order to align financial, operational and employee considerations.
Key employment questions in distressed retail include:
- Do mass layoffs trigger WARN Act notice requirements?
- Are older workers disproportionately affected in reductions in force?
- What final pay or severance obligations apply under state law or company policy?
- What are the obligations to unionized employees under collective bargaining agreements?
- How should companies handle COBRA and healthcare continuation?
- Which key employees should be retained, and what incentives are allowed under bankruptcy law?
- How can businesses communicate effectively to maintain morale, reputation, and trust?
How bankruptcy and employment counsel collaborate to protect brand value:
- Store closures: WARN requirements and lease rejection timelines must be coordinated.
- DIP financing and severance: Budgeting for severance and retention is essential in Chapter 11 deals.
- Prepetition planning: Poorly timed layoffs can create costly priority claims.
- Communications: Consistent, legally sound messaging reduces risk and preserves credibility with employees, customers, vendors and landlords.
As the authors state, “When employment and bankruptcy counsel are seated at the same table from the outset, distressed retailers have the best chance of minimizing legal exposure, preserving brand value and protecting the interests of stakeholders.”
Read the full article in The Global Legal Post here.
Contacts
- Keith A. Markel Partner & Chair, Labor & Employment; Co-Chair, Luxury Brands
- kmarkel@morrisoncohen.com
Related Practices
Our Bankruptcy, Restructuring & Governance Practice employs a multidisciplinary approach to distressed situations with a focus on proactive, creative, commercial and value-added effective solutions and strategies.
Our Labor & Employment Law lawyers counsel businesses of all sizes and levels of complexity in connection with their day-to-day employment concerns, focusing not only on the many federal, state and local laws and regulations that govern the workplace, but on each employer’s business and operational objectives. Our complete approach includes preventative measures, training, and representation in formal proceedings before federal and state courts and administrative agencies.
Our Real Estate lawyers represent individual and institutional investors and fund managers in acquiring, restructuring and foreclosing real estate loans, and in selling and leasing acquired properties.
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We understand the challenges and opportunities facing the luxury goods market and work to build and protect our clients’ global brands.
We have built a strong foundation advising real estate owners and developers on the leasing, purchase, sale, development and financing of property in New York and throughout the United States.
We advise retail and consumer products clients on their full business lifecycle – from establishing new entities to protecting the value and trade secrets of their products to advising on mergers, acquisitions and exit strategies.
