Goldman Sachs has embarked on a painful journey of self-discovery and reactualization as something markedly different from what it once was. This, however, pales in comparison to the reinvention the bank has planned for the bankrupt shell of a company that still owes it $30 million-plus and which it hopes to own sometime late next month, should the courts reopen by then, a plan that has a bit of the wily old Goldman baked into it.

You see, for reasons passing understanding, Goldman had lent the once-and-future bankrupt children’s clothing retailer Gymboree $85 million, and then another $40 million during its second bankruptcy in three years. This did not look good on the balance sheet, but may have a happy ending: While Gymboree has sold off all of its recognizably Gymboree assets to someone with the unfortunate plan of relaunching the brand a month before the entire retail sector of the United States ceased to exist, Goldman is scheming to turn the former Gymboree into something else entirely, which something will be all the more lucrative for the facts that it is not a retail venture and that the former Gymboree held on to all of those lucrative, lucrative sales tax refunds, customs deposits and workers’ compensation payments that tend to add up while a business is failing as spectacularly as did Gymboree. At the same time, the bank would like to see Gymboree become something that Goldman executives and clients might actually have use for.

Goldman, which sponsors Gymboree’s chapter 11 plan that would make it the company’s new owner, seems to have two avenues: Gymboree, now renamed Gemstone Solutions Group Inc., still has a handful of employees on the payroll who would continue to try monetizing various financial assets… At the same time, the skeleton staff would run a tech venture that would become Gemstone’s main operating business. Goldman Sachs is providing $10 million more in financing, and less than $1 million of that would be used to buy a stake in a startup called Certified Art & Collectibles, which is partly owned by Jon Kimmins, Gemstone’s chief financial officer, a role he also held at Gymboree.

Certified Art would target the fine arts and memorabilia sectors, where counterfeiting is rampant. Mr. Kimmins would help lead Certified Art and try to monetize Gemstone’s remaining financial assets. And Certified Art would be renamed LuxVerity.

How Goldman Could Recoup the Money It Sank Into Gymboree [WSJ]
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