American denim and apparel designer and retailer Lucky Brand Dungarees has filed for Chapter 11 of the US Bankruptcy Code in the District of Delaware.
The proceedings under Chapter 11 have been initiated to allow the company to pursue a sale and lower debt.
As part of this proceeding, the company secured new financing commitments from some of its existing lenders.
Lucky Brand has entered into stalking horse asset purchase agreement with lifestyle brands operator SPARC. It includes divestment of significantly all of its operating assets.
ABG-Lucky, a newly formed subsidiary of Authentic Brands Group, has agreed to acquire all the intellectual property assets of Lucky Brand.
Additionally, Lucky Brand and certain of its affiliates entered into a “back-up” asset purchase agreement for the sale of intellectual property and certain other assets to ABG-Lucky.
This deal will be activated if the asset purchase agreement with SPARC terminates under certain circumstances.
The company’s Interim CEO and executive chairman Matthew Kaness said: “The Covid-19 pandemic has severely impacted sales across all channels.
“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 optimise the operations and secure the brand’s long-term success.
“We remain committed to our Associates, vendors, and business partners and appreciate the continued support through this process.”
Lucky Brand operations including stores, e-commerce platform and wholesale business will continue to serve customers during the Chapter 11 process.