US-based denim retailer True Religion has filed for bankruptcy protection from creditors as it aims to reduce its debts.
Through a petition filed under Chapter 11 in the US Bankruptcy Court for the District of Delaware, the retailer aims to implement a restructuring support agreement (RSA) with its sponsor and lenders.
With a plan to recapitalise its capital structure, the company signed the RSA agreement that will allow it to decrease its debt by more than $350m.
True Religion president and CEO John Ermatinger said: “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.
“By dramatically improving our capital structure 24 months in advance of our term loan maturity, we will continue business operations as usual and provide our employees and business partners the long-term stability they need, while providing the necessary flexibility to invest in growing our digital footprint, building connections with customers, and improving organisational competencies.”
The company noted that its businesses will remain open throughout the implementation of the bankruptcy process.
Meanwhile, it secured post-petition debtor-in-possession (DIP) financing from Citizens Bank NA for up to $60m to be able to continue operations.
According to usatoday.com, the retailer is planning to close around 27 stores.
Besides creditors, the company intends to make payments to its vendors, suppliers and landlords.
Established in 2002, True Religion owns 900 boutiques and speciality stores in 50 countries. It is also sponsored by US-based investment management firm TowerBrook Capital Partners.