Sequential Brands files for bankruptcy
New York-based brand management company Sequential Brands Group, Inc. said on Tuesday that it has filed for voluntary Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware.
The group, which owns the Jessica Simpson, Gaiam, Avia and William Rast brands, among others, and also works with a range of licensees, determined that, as a result of the significant debt on its corporate balance sheet, it was no longer able to operate its portfolio of brands. Sequential listed debts of $435 million and assets of $443 million in court papers, according to sources.
The news comes as earlier this month it sold the Ellen Tracy and Caribbean Joe brands to GMA Group for a total of $20 million. Sequential Brands used the bulk of the proceeds to make a $19.6 million payment on its Bank of America revolver loan. Earlier this year, it also sold its 65 percent interest in DVS Footwear to Elan Polo International Inc. for $2 million in cash, as well as reached a deal to sell Heelys to BBC International.
As part of the filing, the company will pursue the sale of its assets including though an auction as part of a deal with some of its lenders. Sequential said it believes that each of its brands is well-positioned for profitability under the stewardship of new owners.
The company also indicated it will be obtaining $150 million in debtor-in-possession financing from its existing lenders. It expects this new financing, together with cash generated from ongoing operations, to provide ample liquidity to support its operations during the sale process.
“The proposed transactions will be implemented pursuant to the terms of a Restructuring Support Agreement reached between the company and its Term B Lenders,” the company said in a statement.
Adding that it “has filed a number of customary motions seeking court approval to continue supporting its operations during the court-supervised process, including the continued payment of employee wages and benefits without interruption and other relief measures customary in these circumstances.”
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