Lucky Brand Dungarees is hoping that a new owner will help revive its sagging fortunes.
The denim brand has filed for Chapter 11 bankruptcy protection, blaming its troubles partially on the COVID-19 pandemic, with initial plans to close at least 13 stores (see list at end of article.) As of May, the company operated 112 stores and 98 outlet locations in North America.
Lucky Brand said it has entered into a stalking horse asset purchase agreement with buyers led by SPARC Group, operator of Aéropostale and Nautica, for the sale of substantially all of the company’s operating assets for $140.1 million in cash and $51.5 million in credit. In connection with the transaction, ABG-Lucky LLC, a newly formed subsidiary of Authentic Brands Group, will acquire all the intellectual property assets of Lucky Brand.
The retailer will continue to operate its business and serve customers during the Chapter 11 process. It also will continue to explore a potential sale with other parties to achieve the highest or otherwise best offer for the company.
Lucky Brand, which is owned by Leonard Green & Partners, had been working to restructure its retail operations and refinance debt before the pandemic struck.
“Despite the company’s best efforts and support of its economic stakeholders, the company’s restructuring efforts were derailed by a combination of the economic impact of the global COVID-19 pandemic, which resulted in extended closures of its retail stores, and limited liquidity, which diminished access to new inventory from its vendors,” Mark Renzi, chief restructuring officer, said in court documents.
Lucky Brand said it has received new financing commitments from certain of its existing lenders that will provide sufficient liquidity to fund the business through the closing of the sale.
“We have made many difficult decisions to preserve the company’s viability during these unprecedented times,” said Matthew Kaness, who was named interim CEO in September and executive chairman in January. “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.”
In a July 3 court filing, Lucky Brand identified the following 13 locations as its "initial closing stores":
Little Rock: 11201 Bass Pro Pkwy
Thousand Oaks: 350 W Hillcrest Drive
Long Beach: 5267 2nd St
Arvin: 5701 Outlets at Tejon Ranch Pkwy
West Hartford: 1500 New Britain Ave
Orlando: 4200 Conroy Road Suite 168
Sarasota: 140 University Town Center Drive Space 266
Dania Beach: 1763 Pointe Blvd
Chicago: 520 N Michigan Ave Suite 127
Troy: 2800 Big Beaver Space North U209
Ridgeland: 1000 Highland Colony Pkwy Suite 2005
Las Vegas: 1955 Festival Plaza Drive Suite 160
San Juan: 1000 The Mall of San Juan Blvd Space 144