BCBG Max Azria Global Holdings LLC received interim court approval to draw down as much as $15 million on a $45 million bankruptcy loan as the company winds its way through Chapter 11.
That also came with permission from a judge to move forward with a plan to shutter 120 stores, most of those outlet and BCBG along with a handful under the Hervé Leger brand. The doors, the company said in court documents, have historically not turned a profit and racked up $10.3 million in losses for BCBG’s 2016 fiscal year. That accounted for 63 percent of the company’s overall losses. The store closing sales are expected to be completed by April 30.
BCBG filed for Chapter 11 this week in New York bankruptcy court for the southern district after a tough set of years chief restructuring officer Holly Felder Etlin said in a declaration was brought on by a confluence of factors that included increased competition, the shift to online sales and expensive store leases and overseas businesses at a time when the company should have focused on developing its intellectual property assets and wholesale business.
Sales fell 20 percent since its fiscal year 2014 to $615 million in the most recent year, according to court documents.
The company is now looking at a potential sale of all or some of its assets with an auction expected by May.
BCBG’s also looking at its options to strike third-party agreements to maintain the operations and license the intellectual property for its businesses in Japan, where it has 13 stores, and Europe, where it counts 34 stores. If it is unable to strike such deals, it would wind down the operations.
The Canadian subsidiary is in the process of shuttering its 51 stores, which is expected to be completed by May 31.
Overseas distribution agreements, of which there are 20, will be reviewed with the company only continuing on with those that are profitable.
Founder Max Azria stepped down as ceo from the company in August of last year, when he also gave up his majority stake in the business.