If a decade ago, someone had said that BCBG Max Azria would file for bankruptcy before perpetual insolvency candidate Sears, they would be laughed out of the room, and yet overnight it was the fashion house that submitted a voluntary petition for Chapter 11 bankruptcy at the infamous courthouse on the southern tip of Manhattan. The company, known for party dresses worn by celebrities including Selena Gomez and Drew Barrymore, became the latest casualty of the struggling US retail sector. It listed assets in the range of $100 million to $500 million and liabilities in the range of $500 million to $1 billion.
The fashion house, which ironically was on the verge of bankruptcy during the peak of the financial crisis in February 2009 - and survived - yet was unable to do so the second time around, when allegedly the economy is in a full blown recovery, received a DIP loan commitment of up to $45 million, which will be used for working capital and to ensure normal operations during the Chapter 11 process, the company said in a statement.
As part of the bankruptcy process, the company is taking steps to close its freestanding stores in Canada and consolidate its operations in Europe and Japan, in addition to the 120 retail stores closed as part of the restructuring efforts. Reuters had reported last week that BCBG Max Azria Group was preparing to file for bankruptcy.
"The steps we are taking now, to address the shift incustomer shopping patterns and the growth of online shopping, will allow us to focus on our partner relationships, digital, ecommerce, selected retail locations, and wholesale and licensing arrangements," Marty Staff, acting interim chief executive of the company said in the statement.
The reorganization process is expected to be completed within six months and the stores will remain open duringthe process, the company said. AlixPartners LLP and Jefferies LLC advised the company on its restructuring.
BCBG is the latest high fashion retailer to fold: competing specialty retailers, including The Limited and American Apparel filed for bankruptcy in recent months. BCBG, an acronym for the French phrase "bon chic, bon genre", a Parisian slang meaning "good style, good attitude", was founded by Tunisian fashion designer Max Azria in 1989. It grew through its retail shops and distribution in department stores including Saks Fifth Avenue and Bloomingdale's.
Full bankruptcy filing below