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Victor Sahn of SulmeyerKupetz: “Caretakers of these young people”

…Negotiate with landlords that payment of rent going forward will be calculated as a percentage of actual sales rather than on payment of monthly contract rent. In that way, the landlords and retailers are partners and the landlord is motivated to get customers into the malls so that the sales take place and rent as […]

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…Negotiate with landlords that payment of rent going forward will be calculated as a percentage of actual sales rather than on payment of monthly contract rent. In that way, the landlords and retailers are partners and the landlord is motivated to get customers into the malls so that the sales take place and rent as a percentage of those sales gets paid.


As part of our series about the future of retail, I had the pleasure of interviewing Victor Sahn.

Partner Victor Sahn with Los Angeles-based bankruptcy law firm SulmeyerKupetz, specializes in financial restructuring and bankruptcy. He has significant experience in bankruptcy cases involving malls and retail centers. He also has very significant experience representing Debtors and Creditors in discount retail and specialty retail bankruptcy cases, particularly in the clothing business. Mr. Sahn has frequently worked with asset purchasers in Chapter 11 and Chapter 7 cases as well as plan proponents in Chapter 11 cases. He can be reached at [email protected] or (213) 626–2311.


Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

This occurred during law school. A very close friend who remains one to this day, applied for and received a law clerking internship with a well-known and highly respected San Diego, California Federal Bankruptcy Judge. He told me what a great mentor the Judge was, how interesting his cases and the practice area were, and how much fun he was having doing the work for credit. He got me interested in it, and when a similar internship came up the next year, I applied for the position and successfully received it. I found out he was right and have been focused on the bankruptcy practice ever since.

Can you share the most interesting story that happened to you since you started your career?

That is a tough question, there have been a few them. Bankruptcy is a practice that progresses quickly because the economics involved in cases require the parties to either resolve their differences or for the Bankruptcy Judge to decide in real time to the issue or crisis in question. Businesses, the lifetime work of their founders and owners, and the jobs of employees are often at stake and cannot wait for the usual grind and extended process that characterizes the timeframes for rulings in most legal disputes. A great deal can get done in a bankruptcy case in a very short time. In 2017–2018, we worked with a client to purchase a business out of a series of bankruptcy cases in a large bankruptcy filing in Delaware. The work was intense for 2–3 weeks, nearly around the clock. I lived in a hotel room in Wilmington, Delaware which was functionally my office and appeared in Court on multiple occasions in order to get the sale closed. In terms of consideration paid for the assets and debt assumed by my client, the buyer, hundreds of millions were involved. No one believed we could get the transaction closed within the very short time that we had, however, with the help of my colleagues at the firm, we succeeded in closing the transaction.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson or takeaway you learned from that? Not sure that I have a good answer to this question.

Are you working on any new exciting projects now? How do you think that might help people?

I have been working on a litigation matter for the last four years involving 15 dollars -20 Million dollars of fraud and embezzlement by the principal of a Chapter 11 Debtor. We are working on recovering the funds wrongfully transferred to third parties that received the funds which were converted by the principal and returning those funds to the creditors of the bankruptcy estate. The matter is coming up for trial during 2021.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

It really depends upon what you enjoy doing and what is important to you. For me, my family has always been central to thriving and not burning out. The energy poured into them is revitalizing and has always kept me centered and aware of what is important.

None of us can achieve success without some help along the way. Is there a person to whom you are grateful, who helped get you to where you are? Can you share a story?

There have been several people without whom I would not be successful or from whom I have learned a great deal. The two primary teachers have been Irving Sulmeyer and Arnold Kupetz, our firm’s founders. Each had tremendous strengths as practitioners and as people and I learned a great deal from each of them. A third, former Bankruptcy Judge Herbert Katz, who I had the internship with referred to above, was a third great teacher for me.

How have you used your success to bring goodness to the world?

Probably in two ways. First, we have tried to be active in the non-profit world although that has diminished more than I would prefer over the recent years. Second, I have provided all kinds of legal services to dozens of friends and relatives, without charge, over the years. I hope that they are appreciative of that help.

Ok super. Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share five examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?

Since my usual exposure, particularly since the Spring of this year has been to represent clients in retail bankruptcy cases such as JC Penney, Lucky Brand Dungarees, Brooks Brothers, Ascena Retail Group, J Crew, Neiman Marcus and some others. These are examples of retailers whose businesses have failed but which were headed in that direction before the Pandemic hit, but whose demise was hastened by the Pandemic. Two major things that retailers have done are (1) negotiate with landlords that payment of rent going forward will be calculated as a percentage of actual sales rather than on payment of monthly contract rent. In that way, the landlords and retailers are partners and the landlord is motivated to get customers into the malls so that the sales take place and rent as a percentage of those sales gets paid; (2) retailers have approached vendors and required them to extend credit terms on much longer time frames than 30–45 days that was previously the practice. Retailers are now asking for 120 days or more before invoices must be paid. This has put enormous pressure on suppliers many of whom have already lost considerable sums of money in the retail bankruptcy cases identified above as well as others. The benefit is the retailers no longer have to borrow money or as much money from their lenders in order to finance the inventory purchases that they need to adequately stock their stores. This reduces pressure on the retailers but is going to be very difficult for the suppliers as a group to meet these new requirements and survive from a cash flow standpoint.

In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?

I think my answer above gives some information on this question. I think that the survival of specialty retailers (Lucky Brand Dungarees, J Crew, Brooks Brothers, etc.) is up for question. We have seen some large discount specialty retailers like Forever 21 go through a liquidation and have a few hundreds of the thousands of stores they have previously survive. Ascena Retail Group had over 2,000 Ann Taylor stores and the number remaining after their reorganization will be well under 1,000. Amazon Prime primarily and the very strong online presence of these same retailers such as Walmart, Target, Kohl’s, and Costco will continue to take business away from brick and mortar operations. The Coronavirus has been a significant accelerant of the brick and mortar demise and likely has created damage in terms of loss of sales and customer traffic that may never be recovered. Also not factored into this are the habits of young people who are 40 years old or younger. These are becoming the customers of today and tomorrow and their perceptions and habits are completely different in my view than those of their older family and citizens. These buying and lifestyle habits are going to have enormous impacts on every aspect of the economy pulling down other sectors besides the retail area which has already been egregiously damaged in recent years.

The so-called “Retail Apocalypse” has been going on for about a decade. While many retailers are struggling, some retailers, like Lululemon, Kroger, and Costco are quite profitable. Can you share a few lessons that other retailers can learn from the success of profitable retailers?

It is going to be more and more difficult for specialty retailers like Lululemon to remain profitable. Their advantages are the quality of their product and its availability online. Their further advantage is how popular the fitness industry has become. But what about Lululemon’s future. People aren’t going to fitness clubs any longer so the purchase of their product for that purpose has been diminished. People are working out at home or in smaller informal groups. This clothing is still popular as everyday clothing that people wear, but I question its future for wearing to athletic clubs as those clubs are not going to rebound, if at all, until sometime in 2022, at the earliest. Already, 24 Hour Fitness, Gold’s Gym and New York Sports Clubs and other very large fitness businesses have filed bankruptcy or liquidated and are out of business due to the Pandemic. Kroger and Costco have the strong online presence and are doing a lot of business that way. Also, they are foot suppliers/shopping which is a necessity that people will always need to fill.

Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?

To the extent that pricing is going to be paramount, I am not sure that anything other than that pricing is going to matter. China has the ability because of the cost of labor and the availability of capital to underwrite these businesses to compete with the existing, most successful retail and discount retail online companies. While not directly asked in your question, the number of Chinese companies that are working to get into the Electric Vehicle space is enormous and very large amounts of capital are being put into technology that will compete with Tesla and the other electric car companies and brands that have been the early entrants into that market. Back to your question-the products offered by the US and European brands are not made in Europe and the US. They are made in China and Southeast Asia. My clients in the retail bankruptcy cases identified above are companies that are based in Sri Lanka, India, Hong Kong, Indonesia, Kuala Lampur and other countries in that part of the world. The labels on the clothing that they make say “Brooks Brothers”, “J Crew”, “Ann Taylor” and “Lucky Brand” on them. I am not sure that online retailers based in the Far East are going to be able to necessarily undercut pricing while also guaranteeing quality that the American/Western online retailers can provide.

Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

A “movement” that I would start would be to develop and open 1,000 “I Promise” schools (www.ipromiseschool.akronschools.com) around the United States modeled exactly like the one that has been opened by Lebron James in Akron, Ohio. However, work with children would start at birth with nutrition, learning for them as babies and toddlers and their parents and continue in pre-school up through elementary, middle and high school and follow them into college. I would start a separate set of schools like “I Promise” that would intervene with students starting with the first or third grades and work to correct whatever deficiencies those children have suffered from up to that time. Finally, these schools would work with the parents or caretakers of these children in order to raise them up as parents and caretakers of these young people.

How can our readers further follow your work? That is a good question. I am just a lawyer practicing my craft here in Los Angeles. I would be happy to stay in touch with you going forward and giving you information that would help respond to this question.

This was very inspiring. Thank you so much for joining us!


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