For months, we’ve heard that a real-estate apocalypse is coming to America’s cities, most especially New York. Stores and restaurants are shutting down, lenders are suing hard-hit landlords, companies are abandoning downtown (and other) offices for good, and the people are fleeing for the suburbs.
Of course, choosing the right suburb isn’t easy. What’s most important to you? Great schools? The great outdoors? As much space as your money can buy? A small-town feel? A rural one? Diversity? (Ha ha ha, just kidding about that last one.)
Well, for some companies (the kinds with CFOs who are about to buff their résumés to a high mirror finish), there’s one suburban amenity that trumps all others: proximity to a particular U.S. bankruptcy judge.
Suite 101 in the modern, white-columned office building at 777 Westchester Ave. in White Plains, N.Y., has become an unlikely landing spot for financially troubled companies based thousands of miles or even half-a-world away from the sleepy suburb north of Manhattan…. Judge Robert Drain is the only bankruptcy judge in White Plains and, until a recent rule change made during the coronavirus pandemic to shift some cases to Manhattan, corporate restructurings filed in the suburb went only to him. That sets White Plains apart from other popular bankruptcy venues, where cases are assigned to judges at random….
Lawyers who have appeared before Judge Drain say they obtain addresses in White Plains for their clients to help ensure their bankruptcy cases, which can involve millions of dollars and thousands of jobs, will begin as smoothly as possible…. Aside from leases, some law firms have incorporated limited liability companies in White Plains months before their clients filed for chapter 11 protection to make sure their cases wind up before Judge Drain.
Unfortunately, like a crowded trade, this strategy is beginning to have diminishing returns.
Judge Drain also has overseen more chapter 11 filings by large public companies than his peers in Manhattan—eight since 2015, according to the UCLA-LoPucki Bankruptcy Research Database. He also would have handled the case of Centric Brands Inc., which filed for chapter 11 in White Plains in May, had the district not issued an order in April requiring a percentage of new chapter 11 cases filed in White Plains to be assigned to Judge Sean Lane of Manhattan.
“From time to time my colleagues and I help each other out when our caseload becomes very heavy,” Judge Drain said.
Companies Lease Offices in New York Suburb to Pick Bankruptcy Judge [WSJ]
Retail Chains Abandon Manhattan: ‘It’s Unsustainable’ [NYT]
Thomas Keller’s Extravagant Hudson Yards Restaurant TAK Room Has Closed [Eater]
The Daily News Is Now a Newspaper Without a Newsroom [NYT]
REI Built an Elaborate HQ. Because of Covid-19, the Outdoor Retailer Wants to Sell It [WSJ]
Worried Lenders Pounce on Landlords Unable to Pay Their Loans [NYT]
Hedge Funds Warn That Shorting Dollars Is Now a Crowded Trade [Bloomberg Quint]