True Religion — the apparel brand known mostly for its signature-stitched denim — today filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware.
The brand, which joins a growing list of fashion and retail firms seeking bankruptcy protection over the past two years, said it has signed a restructuring agreement with the majority of its lenders and its sponsor, TowerBrook Capital Partners, to reduce its debt by over $350 million (or a debt reduction of 75 percent).
In court documents, True Religion has listed the estimated value of its assets at between $100 million and $500 million — the same estimated value of its liabilities.
Citizens Bank, True Religion said in a statement today, is also providing $60 million in debtor-in-possession and exit financing to support operations.
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The brand, which experienced its heyday in the early to mid-2000s, has seen many of its signature denim styles fall out of fashion over the years. Meanwhile, the California-based label relaunched in the shoe category in March, and execs said the reaction had been overwhelmingly positive — with the first range selling out in less than seven days.
True Religion said it plans to continue to operate business as usual.
The company joins Quiksilver, American Apparel, Aéropostale, PacSun, The Limited and a host of other fashion firms that have clamored for bankruptcy protection in turbulent retail times, beginning in 2015.
“After a careful review, we are taking an important step to reduce our debt, reinvigorate True Religion’s iconic brand and position the company for future growth and success,” True Religion president and CEO John Ermatinger said. “By dramatically improving our capital structure 24 months in advance of our term loan maturity, we will continue business operations as usual and provide our employees and business partners the long-term stability they need, while providing the necessary flexibility to invest in growing our digital footprint, building connections with customers and improving organizational competencies.“
True Religion said its restructuring plan provides for full payment of claims of its continuing trade creditors, which includes continuing vendors, suppliers and landlords. Trade creditors “critical to [True Religion’s] business” are expected to be paid in full, according to the company. The plan is subject to confirmation from the bankruptcy court. The approval is expected to come in 90 to 120 days.