Mahwah-based ascena retail group Inc., whose brands include Ann Taylor, Lane Bryant and more, has filed for Chapter 11 bankruptcy protection, it announced Thursday.
Ascena said in a news release that it has entered into a restructuring support agreement with more than 68% of its secured term lenders that is expected to reduce the retail giant’s debt by about $1 billion and provide it with increased financial flexibility as it deals with the fallout of the COVID-19 pandemic.
“The meaningful progress we have made driving sustainable growth, improving our operating margins and strengthening our financial foundation has been severely disrupted by the COVID-19 pandemic,” interim Executive Chair Carrie Teffner said in a prepared statement. “As a result, we took a strategic step forward today to protect the future of the business for all of our stakeholders. The RSA formalizes our lenders’ overwhelming support for a comprehensive plan to deleverage our balance sheet, right-size our operations and inject new capital into the business.”
The company said about 95% of its store base has reopened, and it plans to continue to operate stores and its e-commerce websites.
However, it does plan to optimize its portfolio and strategically reduce its footprint — closing “a significant number” of Justice stores and “a select number” of Ann Taylor, Loft, Lane Bryant and Lou & Grey stores.
“Ann Taylor, LOFT, Lane Bryant, Justice and Lou & Grey have incredibly loyal customers who are at the center of everything we do,” CEO Gary Muto said in a statement. “These iconic brands have significant long-term potential, and we continue to deliver on their mission to provide all women and girls with fashion and inspiration to live confidently every day.”
Ascena said the final number of store closings across its brands will depend upon lease renegotiations, but said it will close all stores in Canada, Puerto Rico and Mexico.
The company also said it will close all of its Catherines stores, selling intellectual property assets and transferring the e-commerce business to City Chic Collective Ltd. As part of the bankruptcy process.
Ascena noted it has a commitment for a new $150 million loan from existing lenders, which will help the company meet operational and restructuring needs.
“This comprehensive restructuring, as well as the actions we are taking to optimize our brand portfolio and store fleet, mark a new start for our company and will allow us to expand our customer-focused strategies across her mobile, online and store experiences,” Muto said.
Kirkland & Ellis LLP is serving as ascena’s legal counsel, while Alvarez and Marsal Holdings LLC is serving as restructuring adviser. Guggenheim Securities LLC is serving as financial adviser.