End of an Era: Layoffs and Lender Lawsuit Augur the Demise of Lord & Taylor

Vicki M. Young
·4 min read

Saadia Group, the owner of fashion sites Lord & Taylor, New York & Co., Fashion to Figure and footwear brand Aquatalia, among others, has been effectively shut down.

Moreover, legal proceedings involving its asset-based lender no longer has Saadia in control of the inventory at its warehouses following a default on a $45.3 million loan agreement.

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White Oak Commercial Finance has obtained a preliminary injunction against Saadia over certain assets on a $45.3 million judgment after Saadia defaulted on the loan. White Oak initially provided a $25 million asset-based loan to Saadia in October 2020 that allowed it to acquire RTW Retailwinds Inc.‘s assets out of bankruptcy. Those assets included the fashion operations under the banners New York & Co. and Fashion to Figure. Saadia then went on an acquisition spree, acquiring the bankrupt Lord & Taylor and Le Tote assets, as well as Aquatalia, which was put up for sale when former owner Global Brands Group filed for Chapter 11 protection in July 2021.

N.Y. State Court Judge Andrea Masley in Manhattan last Friday granted White Oak its preliminary injunction request to bar Saadia from transferring, selling or removing, among other actions, assets that include inventory deemed collateral under the loan agreement. The location of the inventory, which includes apparel and accessories, are in at least two known locations, a warehouse in North Brunswick, N.J., and one in Lancaster, Penn. The order gave White Oak access to goods located elsewhere that fall within the collateral guidelines.

Judge Masley also granted White Oak an “order of seizure,” and directed that Saadia and its agents are barred under the preliminary injunction from interfering with the lender’s ability to take control over the goods. The collateral is not limited to inventory. It also includes “internet websites, domain names, customer lists, sales records, trademark lists,” as well as other books and records connected to operations, including production plans with factories and the status of payables to critical vendors, according to the court order. The order also includes financial records and it bars Saadia and its agents from accessing certain bank accounts, which are now deemed “frozen pending further order of this court.”

While the order gives White Oak the right to seize certain assets, it does not give the lender the ability to dispose of, sell or liquidate the collateral upon taking possession of the goods. The legal proceeding is ongoing as other matters connected to the lawsuit are still pending.

With the goods in limbo, that means that customers who have ordered from any of the Saadia Group’s fashion websites and are still awaiting their orders probably won’t be receiving them anytime soon. Meanwhile, frozen bank accounts will also freeze payments to third-party vendors who sell on the Lord & Taylor site and drop-ship orders to customers. Whether the vendors, who are typically unsecured creditors, get their payments remains to be seen. Since White Oak is a secured lender, it has priority access to the proceeds of any and all asset sales to satisfy its money judgment.

Calls to the Saadia Group and White Oak requesting comment were not returned by press time.

Meanwhile, sources said Friday was the last day for many of Saadia’s employees. These individuals said layoff notices were given to staffers—such as those working at Lord & Taylor and Fashion to Figure, among other divisions—last Friday. Some staffers, such as those at Aquatalia, were furloughed on Monday, one individual said.

Word surfaced early last month that the online e-tail operations at Saadia were struggling and in disarray. An online search indicated complaints on blog posts regarding shipping delays or the inability to cancel memberships at rental services. In addition, the Lancaster warehouse that operated as a distribution center was also listed as “out-of-service” as of Dec. 30, 2023.

Saadia is also on the receiving end of several other lawsuits, including one filed by landlord Cushman & Wakefield in January to collect on $2.5 million owed in back rent for a sublease on office space at 275 Madison Ave. in Manhattan. It also was embroiled in a lawsuit with actress Gabrielle Union over trademarks in connection with a licensing agreement that Saadia lost after failing to make required royalty payments and other fees.

Saadia was a relative unknown prior to its acquisition of RTW Retailwinds. That deal gave the company a reputation for refurbishing distressed retailers, as well as a foothold—and some credibility—in the direct-to-consumer space. Saadia later relaunched Lord & Taylor as a digital-only operation in April 2021.

One source familiar with internal operations said that the acquisition of Lord & Taylor ended up as the beginning of the end because the company didn’t have the infrastructure in place to handle additional e-tail operations. This source added that the problem was compounded when certain key operations were moved to India.