Ann Taylor Parent will Emerge From Bankruptcy as a New Company
Ascena Retail Group Inc. will emerge from bankruptcy with a significantly smaller brick-and-mortar fleet and lower debt.
Ann Taylor and Loft’s parent company announced Monday that a judge from the United States Bankruptcy Court Eastern District of Virginia approved the disclosure statement. It includes a description of operations and a restructuring plan.
Ascena plans to exit Chapter 11 with $1 million in debt reduction. The loans will be converted into business stock which will be distributed among lenders. The company has approved the proposal by 95 percent of secured term lenders at the store. A hearing is scheduled for Oct. 23 to review its approval.
The business also owns Lou & Grey, Justice, and Loft brands. It was granted debtor in possession financing. This includes a $400m asset-based credit facility, a $312m term loan, and $150 million in new money.
According to CEO Gary Muto, the court’s decision marks “notable progression toward emerging from Chapter 11” and prepares Ascena for long-term success. The retailer is currently in the “final stages” of closing all brands. This would reduce the company’s overall presence to around 1,300 sites. (The company is currently negotiating rent with landlords to ensure that shops will remain open.
Muto stated that these measures would allow Muto to invest strategically in the company and ensure its continued profitable development after the Chapter 11 process is over. “I would like to thank all our colleagues for their hard work over the past several months. We’ve completed our reorganization plan and dealt with the challenges of meeting the needs of our clients throughout the epidemic. It wouldn’t have been possible without our amazing staff.
Ascena filed Chapter 11 bankruptcy protection in March, citing the significant economic disruptions caused by a coronavirus. The government-mandated lockdowns forced the retail company to close down its entire fleet in March temporarily. It imposed furloughs, lowered base wages, cut advertising costs, extended vendor payment periods, and withheld rent. This was to save money.
Last week, the firm disclosed that it had sold its Catherines brand at more than twice the original price. Ascena stated in court filings that FullBeauty Brands Operations LLC was the one who proposed $40.8 million to the plus-size retailer.
plan of reorganization
filed for bankruptcy
ann taylor loft lane