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A month after tipping into bankruptcy, troubled retailer Mervyn's LLC is suing its former private equity owners -- Cerberus Capital Management LP and Sun Capital Partners Inc. -- saying that the structure of its 2004 buyout drove the department store chain into Chapter 11.
When the two buyout shops and real estate investor Lubert-Adler/Klaff
Partners LP bought Mervyn's from Target Corp. for $1.2 billion, it was
done through two transactions: one for the company and another for the
real assets on which the stores sit. The retailer's suit claims that
the structure doubled its rent, sending it over the edge into
bankruptcy. Cerberus sold its stake last November for a profit; the remaining owner's equity was wiped out with the bankruptcy. Mervyn's restructuring plans include closing 26 stores and laying off about 1,700 people. - George White
See Reuters story See story on Mervyn's backruptcy on TheDeal.com See Bankruptcy Insider data on Mervyn's Categories Deal Video
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