Lucky Brand Files for Bankruptcy After Pandemic Forces Closures
(Bloomberg) -- Lucky Brand Dungarees LLC and affiliates, known for jeans and other apparel, filed for bankruptcy in Delaware after the coronavirus pandemic scuttled restructuring efforts.
The closely-held company has entered into an asset purchase agreement with SPARC Group LLC, which operates brands including Aéropostale and Nautica, for the sale of “substantially all” of its operating assets, according to a company statement. ABG-Lucky LLC, a newly-formed unit of Authentic Brands Group LLC, a brand manager that bought Barneys New York Inc. out of bankruptcy, will acquire Lucky Brand's intellectual property.
“The Covid-19 pandemic has severely impacted sales across all channels,” Matthew Kaness, Lucky Brand's interim chief executive officer, said in the statement. “While we are optimistic about the reopening of stores and our customers' return, the business has yet to recover fully.”
Lucky Brand, which is a portfolio company of private equity firm Leonard Green & Partners LP, said it will continue to operate during the Chapter 11 process and will seek out other bidders to get the best price for its business.
Foiled Restructuring
Prior to the onset of the coronavirus, the company had been working to restructure its retail operations and stores as well as refinance debt, Mark Renzi, chief restructuring officer, said in court documents.
“Despite the company's best efforts and support of its economic stakeholders, the company's restructuring efforts were derailed by a combination of the economic impact of the global Covid-19 pandemic, which resulted in extended closures of its retail stores, and limited liquidity, which diminished access to new inventory from its vendors,” Renzi said.
Founded in Los Angeles in 1990, Lucky Brand joins a growing number of fashion apparel retailers that are exploring bankruptcy protection amid the pandemic. J.C. Penney Co., Neiman Marcus Group Inc. and J. Crew Group Inc. each filed for bankruptcy in May.
As of the petition date, Lucky Brand had about $181.97 million in funded debt. The company operated 112 specialty retail stores and 98 outlet stores in North America as of May. In addition, Lucky Brand provides licenses to third parties to use the company's trademarks.
The case is Lucky Brand Dungarees LLC, 20-11768, U.S. Bankruptcy Court, District of Delaware.
©2020 Bloomberg L.P.
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