Specialty denim retailer files for Chapter 11

Premium denim brand True Religion Apparel Inc. has struck a deal to erase $350 million of its debt.



The company announced Wednesday that it has filed for Chapter 11 bankruptcy protection and signed a restructuring agreement with the majority of its lenders, including private equity owner TowerBrook Capital Partners. It listed assets and liabilities in the range of $100 million to $500 million.



True Religion said the agreement will reduce its debt by over $350 million and convert it into the substantial majority of the reorganized company’s equity. The company expects it will take 90 to 120 days to obtain confirmation of its pre-arranged plan by the bankruptcy court.



Founded in 2002, True Religion operates some 140 stores in 33 states and markets and also sells its products in some 500 department store and specialty store locations in North America and South America. Sales have fallen in recent years amid competition from online and lower-cost brands. The company has also been hurt by the rise of athleisure wear.



“After a careful review, we are taking an important step to reduce our debt, reinvigorate True Religion’s iconic brand and position the company for future growth and success,” said John Ermatinger, president and CEO of True Religion. “By dramatically improving our capital structure 24 months in advance of our term loan maturity, we will continue business operations as usual and provide our employees and business partners the long-term stability they need, while providing the necessary flexibility to invest in growing our digital footprint, building connections with customers, and improving organizational competencies."



True Religion said its restructuring plan provides for full payment of claims of the company's continuing trade creditors, which includes continuing vendors, suppliers and landlords. The company has filed a motion to honor and pay prepetition purchase orders that were issued prior to the petition date, but which have not yet come due. True Religion has also filed a separate motion to pay certain vendor claims that arose prior to the petition date, as well as to pay for goods received within 20 days of the bankruptcy filing.



True Religion has secured post-petition debtor-in-possession (DIP) financing from Citizens Bank N.A. for up to $60 million.