Jessica Simpson Fashion Brand Owner Preparing to Sell Assets in Bankruptcy
(Bloomberg) – The struggling owner of Jessica Simpson’s brand is set to close a deal to resell his majority stake in the fashion line to the singer and offload other assets in a possible filing for balance sheet in Chapter 11, according to people familiar with the plans.
Sequential Brands Group Inc. had sought to sell its assets to avoid a cash crunch while it negotiated with creditors, but is now preparing to unload its brands in a process that will likely take place in court, have said the people, who asked not to be named to discuss plans for a private company. The company would use the proceeds from the sales to pay off its creditors, including its largest lender KKR & Co., the people added.
The plans are not final and some things could change, the people said. A representative for Sequential Brands did not respond to requests for comment. A representative for KKR declined to comment, while representatives for Jessica Simpson have not commented.
New York-based Sequential owns and licenses a number of consumer fashion and sportswear brands in addition to Jessica Simpson’s clothing and footwear line, including Joe’s Jeans and yoga firm Gaiam. . He sold the Heelys brand for $ 11 million in April.
Sequential stock fell 11% to $ 10.80 Thursday morning in New York City after Bloomberg reported on plans to sell assets and go bankrupt. Shares had slipped 16% this year through Wednesday’s close.
KKR and other lenders recently extended a waiver of existing defaults until July 8. Sequential has been on hold with its lenders since late 2020 after saying it would not be able to meet certain financial measures required under its debt deal due to the pandemic. . Retailers and brands across the country have suffered from the impact of Covid-19 and associated store closings. More than 20 people filed for bankruptcy protection last year.
The company also faced a regulatory investigation into its accounting practices. The Securities and Exchange Commission accused Sequential in late 2020 of deceiving investors with accounting failures that masked its financial problems.
Last month, Sequential granted two executives one-time cash retention bonuses based on their “continuous full-time employment” with the company through events, including a restructuring or liquidation.
(Updates with the share price in the fifth paragraph.)
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