Bankrupt Ann Taylor Parent Will Look Different When It Exits Bankruptcy
Ascena Retail Group Inc. is set to emerge from bankruptcy with significantly reduced debt and a smaller brick-and-mortar fleet.
On Monday, the Ann Taylor and Loft parent announced that a judge in the United States Bankruptcy Court for the Eastern District of Virginia accepted its disclosure statement, which includes a summary of its operations as well as its plan of reorganization.
With the approval, Ascena expects to exit Chapter 11 proceedings with $1 billion in debt relief. (Loans will be converted into equity in the company, which will be turned over to lenders.) According to the retailer, the plan has the support of 95% of its secured term lenders, with a hearing to consider its confirmation currently scheduled for Oct. 23.
What’s more, the company — which also owns the Loft, Lou & Grey and Justice brands — received authorization for debtor-in-possession financing composed of a $400 million asset-based lending facility and a roughly $312 million term loan, which includes $150 million in new money.
In a statement, CEO Gary Muto said that the court’s decision represents “noteworthy progress toward emerging from Chapter 11 and positioning Ascena for long-term success.” He added that the retailer is in the “final stages” of store closures across brands, which is expected to reduce its overall footprint to approximately 1,300 locations, from about 2,800 pre-COVID-19. (The company is also continuing rent discussions with landlords for stores that will remain in operation.)
“We believe these actions will enable us to strategically invest in the business and generate sustainable, profitable growth once we emerge from the Chapter 11 process,” Muto added. “I would like to thank our associates for all of their efforts in recent months as we have not only executed on our restructuring plan but have also addressed the challenges of meeting our customers’ needs through the pandemic. All that we have achieved would not have been possible without our talented team.”
Two months ago, Ascena filed for Chapter 11 protection as its business experienced severe disruptions stemming from the coronavirus pandemic. Amid government-mandated lockdowns, the retail group 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.
Last week, the company announced that it was selling its Catherines brand for more than double what it was initially offered. In a court filing, Ascena said that it was proffered a winning bid of $40.8 million from FullBeauty Brands Operations LLC for the plus-size chain.
More from Footwear News
Ann Taylor Parent Sells Catherines Brand for More Than Double the Initial Offer
Landlords to Bankrupt Ann Taylor Parent: If Your Stores Are Open, You Must Pay Rent
Sign up for FN's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.
