Apparel company Lucky Brand Dungarees is filing for Chapter 11 bankruptcy, it said on July 3, becoming the latest retailer to fall victim to the coronavirus pandemic.
The firm said it had entered into a “stalking horse asset purchase agreement” with SPARC Group LLC, which owns brands such as Aeropostale and Nautica, for the sale of “substantially all” its operating assets.
Such a pact sets a starting bid or minimally accepted offer as a threshold for other potential buyers if they want to bid.
Lucky Brand estimated both assets and liabilities in the range of $100 million to $500 million, its filing in the U.S. Bankruptcy Court of Delaware showed.
“The COVID-19 pandemic has severely impacted sales across all channels,” the firm’s interim chief executive, Matthew Kaness, said in the statement.
“While we are optimistic about the reopening of stores and our customers’ return, the business has yet to recover fully.”
ABG-Lucky, a newly-formed unit of Authentic Brands Group, the brand manager which bought Barneys New York out of bankruptcy, will buy the intellectual property of Lucky Brand, the statement added.
The company said it had received new financing commitments from some existing lenders to ensure enough liquidity to fund the business through the closing of the sale.
The statement did not specify the amount of the commitments received, adding that the company would operate its business during the Chapter 11 process.
Lucky Brand, founded in Los Angeles in 1990, joins a growing roster of apparel retailers pushed towards bankruptcy by the virus. J Crew Group, JC Penney, and Neiman Marcus each filed for bankruptcy in May.
By Kanishka Singh