The Coronavirus pandemic has caused another fashion bankruptcy.
Menswear brand John Varvatos filed for Chapter 11 bankruptcy protection in Delaware on Wednesday with plans to sell its assets to an existing investor, an affiliate of private equity firm Lion Capital. Lion has submitted a credit bid to use $76 million of debt it is owed to buy the assets, according to court filings.
A sale to Lion, whose offer also includes assumption of certain liabilities, is subject to better offers from other bidders. Lion is also set to provide post-petition financing of up to $20 million, the retailer’s first-day declaration said.
“The agreements with Lion represent a critical step in our process to transform our business to drive long-term, sustainable growth,” the company’s founder, John Varvatos, said in a statement. “We have taken decisive action to respond to the challenges that all retailers face in the present environment and we remain extremely confident that our brand, celebrating its 20th year in business, will emerge even stronger. We have a passionate team, a fierce global consumer following and a commitment to our customers, whom we expect to serve for many years to come.”
“In the months immediately preceding the pandemic, John Varvatos Enterprises established a talented new executive leadership team,” the statement said. “In response to the rapid and exponential spread of COVID-19 as well as relevant governmental orders, the company’s leadership took difficult yet prudent steps to temporarily close all store locations and conserve cash.”
Originally launched in 2000 with a collection of tailored clothing and sportswear, John Varvatos now represents an entire men’s lifestyle that includes footwear, bags, belts, eyewear, jewelry, fragrances, the John Varvatos Star USA collection, and Bootleg by John Varvatos.