Nearly one year after rumors about its upcoming bankruptcy first emerged, overnight US-based denim retailer True Religion Apparel finally threw in the towel when it filed for bankruptcy protection, signing a pre-packaged restructuring agreement with most of its lenders.
True Religion, a company whose denims Reuters says have "gradually fallen out of style", filed for Chapter 11 creditor protection in the U.S. bankruptcy court in the District of Delaware (case Case 17-11463), and listed assets and liabilities in the range of $100 million to $500 million (see full filing below). According to the prepack agreement agreed upon by lenders, including TowerBrook Capital Partners, will slash the company's debt by over $350 million. The jean vendor also said it has secured DIP financing from Citizens Bank for up to $60 million.
True Religion Brand Jeans is pleased to announce it has secured critical stakeholder support for a comprehensive financial recapitalization of the Company’s capital structure. In signing a Restructuring Support Agreement (“RSA”) with the substantial majority of its Term Loan Lenders and its Sponsor, TowerBrook Capital Partners, the Company will reduce its debt by over $350 million and convert it into the substantial majority of the reorganized Company’s equity. To implement the terms of the pre-arranged restructuring expeditiously, the Company filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware, and expects it will take 90 to 120 days to obtain confirmation of its pre-arranged plan by the Bankruptcy Court. Throughout the implementation of this process, True Religion will continue to operate its business without interruption to customers, employees and business partners.
"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," True Religion Chief Executive John Ermatinger said in a statement. True Religion also said that critical trade creditors are expected to be paid in full and the company would continue to operate business as usual. The restructuring plan provides for full payment of claims of True Religion's continuing trade creditors, which includes continuing vendors, suppliers and landlords.
The company listed Wachtell Lipton and Pachulski Stang as legal advisors, while financial advisor is MAEVA Group.
For those seeking a culprit for the latest bricks-and-mortar bankruptcy, look no further than Amazon. The denim retailer's financial struggles are due in part to consumer tastes shifting toward online shopping and away from the brick-and-mortar shops and department stores where the company's jeans have been primarily sold.
True Religion said the pre-arranged plan could take about 90 to 120 days to receive confirmation from the bankruptcy court.
* * *
Last October, Reuters reported in October that the retailer had hired a legal adviser to explore several debt restructuring options, as such today's filing should come as no surprise.
Finally, with the True Religion bankruptcy filing, here is the full revised Moody's list of which deeply distressed retailer will likely file for bankruptcy next.
True Religion Apparel - men's and women's clothing
- Boardriders SA - sporting subsidiary of Quiksilver
- The Bon-Ton Stores - parent of department store chain
- Fairway Group Holdings - food retailer
- Tops Holding II - supermarket operator
- 99 Cents Only Stores - discount retailer
- TOMS Shoes - footwear company
- David's Bridal - wedding dresses and formalwear seller
- Evergreen AcqCo 1 LP - parent of thrift chain Savers
- Charming Charlie - women's jewelry and accessories
- Vince LLC - clothing retailer
- Calceus Acquisition - owner of Cole Haan footwear firm
- Charlotte Russe - women's clothing
- Neiman Marcus Group - luxury department store
- Sears Holdings - owner of Sears and Kmart.
- Indra Holdings - holding company owner of Totes Isotoner
- Velocity Pooling Vehicle - does business as MAG, Motorsport Aftermarket Group
- Chinos Intermediate Holdings - parent of J. Crew Group
- Everest Holdings - manages Eddie Bauer brand
- Nine West Holdings - clothing, shoes and accessories
- Claire's Stores - accessories and jewelry
- Gymboree - children's apparel