The financial fallout of the pandemic has even established denim brands on shaky ground.
Debt burden caused by recent challenges, including the COVID-19 pandemic, led to Lucky Brand announcing Friday that it has filed for Chapter 11 bankruptcy in Delaware.
The Los Angeles-based brand stated that it has entered into a stalking-horse asset purchase agreement with SPARC Group LLC, which is the global operator of lifestyle brands including Aéropostale and Nautica, for the sale of substantially all of the company’s operating assets. A newly formed subsidiary of Authentic Brands Group LLC, ABG-Lucky LLC, will acquire all of Lucky Brand’s intellectual property assets.
During the Chapter 11 process, Lucky Brand and its advisors will “continue to explore potential sale transactions with other parties to achieve the highest or otherwise best offer” for the company.
Watch on FN
Lucky Brand will remain operational with the majority of its physical stores, e-commerce platform and wholesale business now open. The company has more than 100 stores in North America, largely located in shopping malls.
Filing Chapter 11, said Matthew A. Kaness, Lucky Brand interim CEO since September and executive chairman, is the “best course of action to optimize the operations and secure the brand’s long-term success.”
“The COVID-19 pandemic has severely impacted sales across all channels,” Kaness said. “While we are optimistic about the reopening of stores and our customers’ return, the business has yet to recover fully.”
Los Angeles-based G-Star Raw Retail Inc. also filed for Chapter 11 bankruptcy on Friday, citing financial woes from the coronavirus crisis.
The largest creditor listed in its 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 entered into voluntary administration in Australia, despite reportedly not experiencing any major debt.
True Religion was among the first denim brands to file for bankruptcy in the early days of the pandemic while BLDWN also shut down and filed a Chapter 7 petition.
Editor’s Note: This story was reported by FN sister magazine Sourcing Journal. For more, visit Sourcingjournal.com.