Lucky, G-Star Both File Chapter 11
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Lucky Brand Dungarees and G-Star Raw Retail Inc. both sunk into insolvency Friday, filing for Chapter 11 protection from creditors in the wake of the coronavirus shutdown.
Los Angeles-based Lucky Brand went to court with a stalking horse asset purchase agreement that would see its operating assets sold to SPARC Group, which operates lifestyle brands, including Aéropostale and Nautica. In connection with that transaction, Authentic Brands Group, would acquire the intellectual property of Lucky Brand.
Lucky Brand also signed a back-up agreement with Authentic for the intellectual property should the deal with SPARC not go through.
“To facilitate the sale and reduce its debt burden caused by recent challenges, including the COVID-19 pandemic, Lucky Brand has initiated proceedings under Chapter 11,” said the company, which filed for bankruptcy in Delaware.
Matthew Kaness, who was named interim chief executive officer last September and executive chairman in January, said: “The COVID-19 pandemic has severely impacted sales across all channels. While we are optimistic about the reopening of stores and our customers’ return, the business has yet to recover fully. We have made many difficult decisions to preserve the company’s viability during these unprecedented times. After considering all options, the board has determined that a Chapter 11 filing is the best course of action to optimize the operations and secure the brand’s long-term success. We remain committed to our associates, vendors, and business partners and appreciate the continued support through this process.”
G-Star, which is based in Los Angeles and filed for bankruptcy there, did not lay out just what sent it to court in its initial filings, but fashion retailers of all stripes were hit hard in pandemic, which forced the closure of stores across the country.
The company clearly did not have enough wiggle room in its finances to survive the blow.
G-Star listed its sales last year at $68 million with a $2 million profit.
The largest creditor listed in its bankruptcy is its landlord at 475 Fifth Avenue in New York, owed $426,007.
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