LOS ANGELES — Frederick’s of Hollywood is seeking to get out of Chapter 11 and into the 21st century.
The retailer known for its sexy lingerie filed a reorganization plan in U.S. Bankruptcy Court for the Central District of California here late Friday that, if approved, would allow it to exit Chapter 11 by the end of October.
Soon after, investments in retail technology would also make it more efficient as it concurrently expands its store base and upgrades its merchandise mix.
Key points of the plan call for the conversion of "significant" debt to equity for the company’s creditors, led by Credit Agricole, a French investment bank. Credit Agricole will be the largest shareholder after the emergence from Chapter 11.
Two substantial creditors, National Corset and Joseph Lingerie, would become company principals, and the firm’s management would be granted options for up to 14 percent of the company’s shares.
The plan filed with the court doesn’t include an equity stake for Wilshire Partners, the Newport Beach, Calif.-based investment firm that acquired the 55-year-old company on June 16, 2000, less than a month before it filed for bankruptcy protection. Its equity would be "extinguished," according to Frederick’s attorney Michael Tuchin, with Klee, Tuchin, Boddanoff & Stern.
The plan calls for an unspecified investment for the future growth of the company, including capital for an unspecified number of new stores as well as funds to spiff up Frederick’s merchandise and image.
Specifically, court documents indicate Frederick’s is planning to roll out a point-of-sale system to retail stores, redesign its catalog, and repackage product lines.
"This will convert a substantial portion of creditors’ debt to equity and they will become the owners of the majority of the stock of reorganized Frederick’s," Tuchin said.
All four of Frederick’s companies are included in the plan: FOH, Inc.; FOH Stores, currently counting 172 units; Hollywood Mail Order LLC, which operates Frederick’s Catalog; and FOH Holdings, Inc.
Linda LoRe, president and chief executive officer, and her senior management team are expected to stay on. LoRe’s base salary will be $450,000 and she will receive a "stay" bonus of $200,000 upon confirmation of the plan. Senior management will take a 10 percent pay cut through the end of 2003 to save the company money.Frederick’s was forced to seek protection because of a "crushing" debt load of $70 million. According to court documents, the company is on a much better footing these days. Assets are $56 million, including $29 million in trademark assets, $12 million in inventory and $700,000 cash. Liabilities are approximately $28.8 million. Monthly sales in May were $9.2 million compared with $10 million tallied in April.
"What a great thing for the company," said LoRe, who described the proceedings, and her role in them, as similar to having "three full-time jobs." She said she was relieved on Friday. "We can finally begin the process of getting out of this."
Days prior to the filing, rumors surfaced that there might be a fire sale of the company.
Marty Staff, former ceo of Hugo Boss USA, emerged as possible suitor. A spokesman for Staff declined comment on his plans.
However, a source close to Staff said that he has a keen interest in acquiring Frederick’s of Hollywood and financing the acquisition wouldn’t be an issue.
"You have a brand with high recognition that needs to be reinvigorated and that’s precisely what Marty excels at," said the source.
Staff and LoRe crossed paths before when LoRe, former president and ceo of Giorgio Beverly Hills, was involved in the launches of the scents Hugo Woman, Hugo and Hugo Boss for Men in the late Nineties.
Another source said LoRe and Frederick’s senior management offered to buy the company but that creditors rejected the offer.
LoRe said she and top executives did not plan to buy the company and declined comment as to any other offers on the table. She conceded there have been many.
"Every company is always for sale for anybody who’s the right bidder," she said. "What we have here is a consensual plan of reorganization that is the least disruptive to the business and makes the most sense because we can get out quickly."
The likeliest scenario right now, according to sources, is that the debtors and lenders will support the proposed plan. A hearing for the bankruptcy judge to approve court documents has been scheduled for Sept. 4. After that, the plan will be distributed to creditors for a vote."We’ll be out of Chapter 11 hopefully just in time for us to focus on the really important selling season," said LoRe.
Sources said Frederick’s could be ripe for a sale at that time.
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye