Lucky Brand Starts Chapter 11 Proceedings, Seeks Sale

Lucky Brand Starts Chapter 11 Proceedings, Pursues Sale

Lucky Brand has started proceedings under Chapter 11 to help pave the way for a sale and decrease its debt load brought about by recent difficulties with the inclusion of the pandemic. The retailer said it has received new financing commitments that will offer enough liquidity to fund it until the sale’s closing, according to an announcement.

Executive Chairman and Interim CEO Matthew A. Kaness said, “We have made many difficult decisions to preserve the Company’s viability during these unprecedented times. After considering all options, the Board has determined that a Chapter 11 filing is the best course of action to optimize the operations and secure the brand’s long-term success.”

Lucky Brand also said it has come into a stalking horse asset purchase agreement with Nautica and Aéropostale brand operator SPARC Group LLC for the sale of most of its operating assets. In addition, the retailer said new Authentic Brands Group LLC subsidiary ABG-Lucky LLC will buy all of its intellectual property assets.

Young, Conway, Stargatt & Taylor, LLP and Latham & Watkins, LLP are serving as the legal counsel of the retailer, while Berkeley Research Group is functioning as its restructuring adviser. Houlihan Lokey Capital, Inc. is functioning as the retailer’s investment banker and financial adviser.

Lucky Brand said the “vast majority” of its online shopping platform, retail locations and wholesale businesses stay open to customers. The retailer also said that it and its advisers will keep looking into possible sale transactions “with other parties to achieve the highest or otherwise best offer for the Company” during Chapter 11.

The news comes as nearly 3,600 companies filed for Chapter 11 bankruptcy in the first half of this year, representing an increase of 26 percent. The increase occurs as companies fall to the financial ills of COVID-19 and are seeking protection from creditors. There were 2,855 Chapter 11 filings by the conclusion of June last year.


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