BCBG Max Azria is facing a new hurdle in its bankruptcy process — and this one has been set up by the brand’s founder.
Max Azria, along with his wife and former BCBG creative director Lubov Azria, on Monday objected to the company’s proposed restructuring plan, arguing that it calls for overly broad and compulsory releases of financial claims, including their own.
The Azrias have owned 20 percent of the company since 2015, when they sold 80 percent of the firm to Guggenheim Partners for a $135 million capital infusion, which was part of an out-of-court restructuring.
As such, the couple maintained they have “substantial claims” against the company, including severance Lubov Azria is allegedly owed, reimbursement for Max Azria’s contribution for an aircraft and a number of lease payments owed on property the couple owns. All together the claims total more than $360,000, according to the objection.
Although a bankruptcy court judge in April agreed that Lubov Azria’s employment agreement, including her severance, could be rejected by BCBG as part of the bankruptcy process, she is still fighting for payment, according to court records.
The couple also admitted that they are still in active negotiations with BCBG regarding the leases and “look forward to continued progress on those front,” but are objecting to the current treatment of these claims in order to protect their rights.
Under the proposed Chapter 11 plan, BCBG is set to cease operations after its intellectual property assets are sold to a venture of Hong Kong-based Global Brands Group, which has placed a $23 million stalking horse bid for the assets.
A licensing deal is already in the works however, which will likely see the BCBG brand name live on.
BCBG began store closing sales in April after seeking bankruptcy protection in March. At the time of its bankruptcy filing, the company told the court that it was carrying between $500 million and $1 billion in liabilities with only $100 million to $500 million in assets.
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