The company behind the brands Joie, Current/Elliott and Equipment has closed stores since even before the pandemic, and plans to focus on e-commerce and wholesale, according to the company’s filings Monday in Delaware bankruptcy court. The company once had some 33 stores, but since the COVID-19 pandemic and the initial store closures, it began to scale back its physical presence, its chief restructuring officer Evan Hengel, managing director of Berkeley Research Group, wrote in a filing.
Collected Group, like many other apparel retail companies that have contended with reduced store traffic during the pandemic, had sought to renegotiate leases with its landlords. The Chapter 11 process allows companies to exit leases and pay capped damages for doing so, which makes it financially feasible to close stores.
The company plans to use the bankruptcy proceedings to facilitate those store closures and cut more than 80 percent of its debt, it said in a statement Monday. Its chief executive officer since 2017, James Miller, will step down from his role and take on an adviser title and be on the company’s board. Collected’s next CEO will be Silvia Mazzucchelli, a board member who was also the former CEO of Modcloth.
“The company will continue to sharpen its focus on direct-to-consumer e-commerce, domestic and international wholesale, with the restructuring enabling the company to compete in these channels from a position of greater financial strength,” Collected said in its statement.
The company, founded in 2001 and owned by private equity firm KKR, listed assets of between $50 million and $100 million and liabilities between $100 million and $500 million, according to its Chapter 11 petition. Among its top creditors, the company listed mall venues and landlords including Century City Mall LLC and Tysons Galleria and a number of clothing vendors.
KKR is expected to retain ownership of the business after the bankruptcy, which, in this case, is essentially aimed at facilitating a balance sheet restructuring. The company has some $185.3 million in funded debt obligations and about $35.5 million in unsecured debt, which includes unpaid debt and damages for rejecting leases, according to Hengel’s filing.
The retailer has some 125 employees, including in its distribution facility, according to filings.
“I am incredibly proud of what has been accomplished over the last four years at The Collected Group,” said Miller, the outgoing CEO. “The unique opportunity to serve as both CEO and CCO [chief creative officer] allowed me to ensure that business objectives and brand vision were always aligned, and I step away from day-to-day leadership of the company confident that it is well-positioned for the future.”