Add True Religion Brand Jeans to the growing list of 2017 retail bankruptcies. The company has reached an agreement to reduce its debt by more than $350 million via a voluntary Chapter 11 petition to the U.S. Bankruptcy Court for the District of Delaware. Under the terms of this pre-arranged restructuring with its sponsor, TowerBrook Capital Partners, True Religion will continue to operate without interruption to customers, employees and business partners.
“By dramatically improving our capital structure 24 months in advance of our term loan maturity, we will continue business operations as usual and provide our employees and business partners the long-term stability they need,” said John Ermatinger, President and CEO of True Religion in a statement. The reorganization will also “provide the necessary flexibility to invest in our growing digital footprint, building connections with customers and improving organizational competencies.”
True Religion has secured post-petition debtor-in-possession financing from Citizens Bank N.A. for up to $60 million, providing the retailer with sufficient funding to finance operations post confirmation. The company expects that it will take 90 to 120 days to obtain confirmation of its plan by the Bankruptcy Court.
Like many other mall-based apparel retailers, True Religion has struggled to compete with online merchants and fast fashion competitors. There has been a long parade of bankruptcies and buyouts in 2017, most recently BCBG and Rue21. Early in June, Gymboree missed a $171 million interest payment that may signal it too is headed to the bankruptcy courts.
True Religion operates 140 brick-and-mortar stores and generated $369.5 million in revenue during its most recent fiscal year, according to the Wall Street Journal.