The Walking Co. Holdings Inc. has filed a petition for bankruptcy court protection for the second time in ten years.
The last filing was in 2009, when the company was then still a publicly listed firm. An investor group led by Richard Kayne of Kayne Anderson Capital Advisors helped the company exit its first tour of bankruptcy court in 2010 through a capital infusion of $10 million.
The latest Chapter 11 petition was filed Tuesday in a Delaware bankruptcy court. Three subsidiaries — footwear brand The Walking Company, sportswear brand Big Dog USA Inc. and footwear catalog Footsmart Inc. — are also part of the bankruptcy case. Tuesday’s filing is considered a pre-packaged filing, since the key terms have been pre-negotiated and a reorganization plan – subject to bankruptcy court approval – has also been filed with the court.
The Walking Co. said it has secured $10 million in equity commitments from its largest shareholders and $50 million financing to support business operations and allow for the requisite “exit” financing for companies that emerge from the bankruptcy process.
Andrew D. Feshbach, president and chief executive officer of The Walking Co. Holdings Inc., said in a court filing that a contributing factor to the need to file its so-called Chapter 22 was due in part to Deckers Outdoor Corp.’s termination at the end of 2016 of a vendor relationship. Deckers is the manufacturer of Ugg footwear.
“While [The Walking Co.] had previously phased out the distribution of other footwear brands and managed to replace the lost sales with sales of other brands (third-party or private label), as a result of the difficult environment for store-based retailing in 2017, TWC could not replace the lost Ugg sales fast enough,” Feshbach said.
The ceo said the company from mid to late-2017 also sought rent concessions from its mall landlords. While it did receive some concessions in the form of deferred rent, the overall amount was “insufficient to offset both the continued soft sales in TWC’s mall stores during the 2017 holiday season and the loss of Ugg sales.” Contributing to the financial pressure were reductions in the value of its inventory by its lender, Wells Fargo, which in turn reduced the amount of capital available to the company under its credit line.
Wells Fargo is providing the company with a $57.25 million debtor-in-possession financing facility to allow it to continue operations while in bankruptcy proceedings.
According to the Chapter 11 petition, the Santa Barbara, Calif.-based company listed estimated assets of $100 million to $500 million, and estimated liabilities of $50 million to $100 million.
Among the holders of its top 10 unsecured claims are: sourcing firm Li & Fung, Dongguan, China, $5.2 million; footwear brand Dansko, Inc., West Grove, Pa., $1.5 million; shipping firm FedEx, Pasadena, Calif., $850,000, and footwear firm A.A. Footwear Co., Ltd., Dongguan, China, $612,635.