Lucky Brand Files for Chapter 11 Bankruptcy
Lucky Brand Dungarees, LLC, one of Los Angeles’ leading denim companies, filed for a Chapter 11 bankruptcy on July 3 in the U.S. Bankruptcy Court in the District of Delaware, the 30-year-old apparel company announced.
Authentic Brands Group LLC, owner of brands Aéropostale and Nautica, and SPARC Group LLC, an operating group which licences brands from ABG, entered into a stalking horse asset purchase agreement for Lucky Brand’s operating assets. Authentic Brands Group LLC will acquire all of Lucky Brands’ intellectual property assets. ABG formed a new subsidiary, ABG-Lucky LLC, to handle the deal. ABG made headlines in the past year for acquiring the intellectual property of major apparel brands and retailers such as Forever 21, Barneys New York and Volcom.
Lucky Brand’s executive chairman and interim chief executive officer Matthew A. Kaness said that the denim company received financing commitments from existing lenders to provide liquidity during the sale and that it will be operating its wholesale and it retail operations with new change.
"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," Kaness said. Lucky Brand runs 200 locations in North America and is sold in department stores, according to a company statement.
According to court documents, Lucky’s creditors include merchandise vendors such as Red & Blue International LTD to which Lucky owes more than $13 million. Another creditor included mall operator Simon Property Group, to whom Lucky owes more than $4 million. In 2013, private equity firm Leonard Green & Partners acquired Lucky Brand from the Fifth & Pacific Companies, formerly Liz Claiborne, for about $225 million. Since then, much of Lucky Brand’s equity and debt has been held by Leonard Green & Partners.