The financial consequences of the pandemic have even established denim brands on shaky ground.
The debt burden caused by recent challenges, including the COVID-19 pandemic, prompted Lucky Brand to announce Friday that it filed for Chapter 11 bankruptcy in Delaware.
The Los Angeles-based brand stated that it has signed a stalking asset purchase agreement with SPARC Group LLC, which is the global operator of lifestyle brands, including Aéropostale and Nautica, for the sale of virtually all operating assets. of the company. A newly formed subsidiary of Authentic Brands Group LLC, ABG-Lucky LLC, will acquire all of the intellectual property assets of Lucky Brand.
During the Chapter 11 process, Lucky Brand and its advisers “will continue to explore possible sales transactions with other parties to achieve the highest or best offer” for the company.
Lucky Brand will continue to operate with the majority of its now open physical stores, e-commerce platform and wholesale business. The company has more than 100 stores in North America, located primarily in shopping malls.
The Chapter 11 presentation, said Matthew A. Kaness, interim CEO of Lucky Brand since September and CEO, is the “best course of action to streamline operations and ensure the brand’s long-term success.”
“The COVID-19 pandemic has severely affected sales across all channels,” said Kaness. “While we are optimistic about the reopening of the stores and the return of our customers, the business has not yet fully recovered.”
Los Angeles-based G-Star Raw Retail Inc. also filed for Chapter 11 bankruptcy on Friday, citing financial problems from the coronavirus crisis.
The largest creditor listed for bankruptcy is its landlord at 475 Fifth Avenue in New York, owed $ 426,007, according to Apparel Resources. The flagship store was recently looted during the Black Lives Matter protests.
In May, the sustainable denim brand had gone into voluntary administration in Australia, even though it reportedly did not experience any major debt.
True Religion was one of the first denim brands to file for bankruptcy in the early days of the pandemic, while BLDWN also closed and filed a Chapter 7 petition.
