Ascena Retail Group Inc. has won court approval to sell its brands out of bankruptcy.
Yesterday in the United States Bankruptcy Court for the Eastern District of Virginia, a judge green-lit the sale of its Ann Taylor, Loft, Lane Bryant and Lou & Grey labels to Sycamore Partners, which specializes in retail and consumer investments. Its portfolio includes Belk, Hot Topic, Talbots, The Limited and Torrid.
The move comes less than two weeks after Ascena entered into an asset purchase agreement with Premium Apparel LLC — an affiliate of the private equity firm, which has approximately $10 billion in assets under management. As part of the deal, Premium Apparel will acquire the brand assets for $540 million on a cash-free and debt-free basis, subject to certain adjustments, and the assumption of certain liabilities. It also intends to retain a “substantial portion” of the retailer’s brick-and-mortar fleet as well as its employees.
Speculation over Sycamore’s purchase of Ascena’s brand first swirled in July and again in late September. It was also rumored that Authentic Brands Group was considering a buyout of the company, alongside frequent buying partners Simon Property Group and Brookfield Property Partners. (Over the past year, ABG has purchased luxury department store Barneys New York, fast-fashion giant Forever 21, denim purveyor Lucky Brand and menswear clothier Brooks Brothers.)
Ascena filed for bankruptcy in late July as its business experienced severe disruptions stemming from the coronavirus pandemic. Amid government-mandated lockdowns, the company was forced to temporarily shutter nearly its entire fleet starting in mid-March. It implemented furloughs, reduced base salaries, cut back on advertising expenses, extended vendor payment terms and withheld rent payments in an attempt to preserve capital.
Over the past couple months, Ascena has been offloading its brands: The intellectual property assets and e-commerce business of its Catherines label was acquired by FullBeauty Brands Operations LLC, while Justice Brand Holdings LLC, an entity formed by Bluestar Alliance LLC, snapped up the intellectual property of Justice.