With its voluntary Chapter 11 filing today, Ascena Retail Group, parent company of brands including Ann Taylor, LOFT and Lane Bryant,hopes to reduce its debt load by $1 billion. The company, which currently operates approximately 2,800 stores, has created a restructuring plan that includes closing a number of its brick-and-mortar stores, including all of its Catherines stores and a significant number of Justice stores. Ascena also will shutter all its stores operating in Canada, Mexico and Puerto Rico.
The company, which has received a $150 million loan for operating purposes, filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Eastern District of Virginia. Ascena’s restructuring plan has been accepted by more than 68% of its secured term lenders.
Earlier in July, Bloomberg reported that an Ascena bankruptcy could shutter as many as 1,200 stores. The retailer furloughed all its store associates in late March as it closed brick-and-mortar locations due to COVID-19, but it has since reopened 95% of its store fleet. The company will continue to sell through its brands’ various e-Commerce sites with the exception of Catherines. Ascena has entered into an asset purchase agreement to sell the Catherines site and intellectual property to Australia-based City Chic Collective Limited.
The Ascena restructuring agreement “formalizes our lenders’ overwhelming support for a comprehensive plan to deleverage our balance sheet, right-size our operations and inject new capital into the business,” said Carrie Teffner, Interim Chief Executive of Ascena in a statement. “With the cash generated from our ongoing operations and the new money financing commitments we received from our lenders, we expect to have sufficient liquidity to meet our operational obligations during the court-supervised process.”