Lucky Brand has filed for Chapter 11 bankruptcy protection in the state of Delaware on Friday, blaming its troubles in part on the Coronavirus pandemic, and said it has a deal lined up to sell the company.
In a court filing, the Los Angeles-based denim brand described a proposal to sell Lucky to buyers led by apparel retail operator SPARC Group for $140.1 million in cash and $51.5 million in credit. Lucky said the offer would preserve much or all of the company’s current network of stores, but said it plans to close 13 stores and could shutter more during the bankruptcy process.
SPARC operates under the Aeropostale and Nautica brands that are owned by Authentic Brands Group and mall operator Simon Property Group, according to the filing. In connection with the transaction, ABG-Lucky LLC, a newly formed subsidiary of Authentic Brands Group, will acquire all the intellectual property assets of Lucky Brand. The company anticipates a sale closing by mid-August.
Lucky Brand will be operating its business in the ordinary course during the Chapter 11 process, and the vast majority of its stores, e-commerce platform, and wholesale business remain open to serve customers. During Chapter 11, Lucky Brand and its advisors will continue to explore potential sale transactions with other parties to achieve the highest or otherwise best offer for the company.
Lucky Brand operates more than 200 U.S. stores, mostly in shopping malls, and sells items at wholesale to stores including Macy’s, Nordstrom, and Costco.