BCBG Max Azria Lays Off More Employees Following Bankruptcy Filing
The BCBG Max Azria Group, which filed for bankruptcy protection on Feb. 28, gave notice earlier this month that it will lay off another 116 people, effective May 11. All departments were impacted. This comes after the Los Angeles contemporary label laid off 123 people last November and another 71 people one year ago.
The layoffs are part of the bankruptcy restructuring going on at the well-known brand, which specializes in stylish dresses, eveningwear, trendy pants and sophisticated tops.
Last year, the company’s founder, Max Azria, was put on paid leave as interim chief executive Marty Staff stepped in to try to right the finances of the company. The company’s chief creative director, Lubov Azria, who is married to Max Azria, was laid off a few weeks ago, being replaced by Bernd Kroeber.
Like many clothing concerns that operate their own retail chains, business has been challenging as more consumers in recent years have headed to online sites to do their shopping. When it declared bankruptcy last month, BCBG Max Azria noted it had between $500 million to $1 billion in debt and $100 million to $500 million in assets.
It is unclear what will happen to the company founded in 1989. BCBG Max Azria has said it would like to close 120 of its stores. Under reorganization, it would then concentrate on its e-commerce business, wholesale transactions, shops-in-shops and licensing deals.
The large BCBG Max Azria showroom and the showroom for its other brand, Hervé Leger, are now closed at the California Market Center, where it took up most of the real estate on the upscale fifth floor of the main building.
There are a few other options for BCBG Max Azria. The company could be acquired by another entity or its brand name could be sold, effectively shuttering the clothing venture after more than 25 years in business. A bankruptcy motion calls for a March 30 deadline for businesses to show they are interested in doing an in-depth review of the company. The deadline to make a bid for the company is set for May 19 with an auction scheduled for May 24. A confirmation hearing to approve the winning proposal, if necessary, is scheduled on or before July 10, but BCBG can give notice to change that date.
Guggenheim Partners Investment Management and its affiliates have outstanding loans of more than $324.4 million to BCBG Max Azria. Guggenheim now owns 80 percent of the apparel company’s common equity.