For the second time in three years, True Religion Apparel Inc. has filed for Chapter 11 bankruptcy protection.
The jeans and apparel company said that the indefinite store closings brought on by COVID-19 pandemic has “accelerated” the liquidity constraints it already faced before the current crisis started. In court documents, interim CFO Richard Lynch said the closings eliminated 80% of True Religion’s sales, making bankruptcy "unavoidable
“While the debtors would have preferred to wait-out the current instabilities of the financial markets and retail industry generally, they simply could not afford to do so,” stated True Religion, according to court documents.
True Religion, which has been struggling for some time amid the rise of the athleisure trend, is seeking new financing and a court order that would allow it to skip rent for 60 days as it keeps its stores shuttered.
The company said that bankruptcy was the only way to maximize value for shareholders and stay in business once non-essential retailers can reopen their stores. For its most recent fiscal year, which ended before the COVID-19 outbreak, True Religion had a net loss of $50 million on $259 million of revenue,
True Religion previously filed for bankruptcy in summer 2017. It exited some four months later, under a reorganization plan that reduced the company’s nearly $500 million debt through a debt-for-equity swap.