Los Angeles-based denim giant Lucky Brand and G-Star Raw Retail Inc. filed for Chapter 11 bankruptcy in Delaware on 3rd July, citing financial crisis from the coronavirus crisis. Due to the recent challenge posed by the Covid-19 epidemic, the debt burden was to lead the established denim brand to file for Chapter 11 bankruptcy.
Lucky 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. It also signed a back-up agreement with Authentic Brands Group, which will acquire all of its intellectual property assets.
However, Lucky Brand will remain operational with the majority of its physical stores, e-commerce platform, and wholesale business. In the meantime, Lucky Brand and its advisers will continue to explore potential sales transactions with other parties to achieve the highest or otherwise best offer for the company, said the company.
Matthew A. Kaness who is the interim CEO of Lucky Brand since September and executive chairman said filing the chapter 11 “best course of action to optimize the operations and secure the brand’s long-term success.”
The company has more than 100 stores in North America, largely located in shopping malls.
Another Los Angeles-based G-Star Raw Retail Inc. also filed for Chapter 11 bankruptcy on the same day. According to Apparel Resources, the largest creditor listed in its bankruptcy is its landlord at 475 Fifth Avenue in New York, owed $426,007.
Nicole Clayton, CEO of G-Star Raw Retail Inc. said in court papers that COVID-19 severely disrupted the Debtors’ business operations, and the global fallout from the pandemic is ongoing.
Recently, the flagship store was looted during the ‘Black Lives Matter’ protests. The Dutch-based G-Star Raw specializes in unwashed and untreated denim and has over 6,500 selling points worldwide.