Fashion designer Max Azria’s wife has appealed a New York bankruptcy court’s ruling that allowed BCBG Max Azria Group Inc. to void her $7 million golden parachute payout after the bankrupt women’s clothing retailer fired her in March.
The move comes at the same time BCBG asked the court for a three-month extension of the deadline to file the company's Chapter 11 plan, to October 2017, and to extend the solicitation period to December 2017. The appeal and the extension request were both filed Tuesday.
“The debtors have made substantial progress towards achieving their restructuring goals in a short period of time,” BCBG said in its motion to extend the exclusivity periods. “Significant work, however, remains to be done.”
Lubov Azria’s adversary proceeding against BCBG for firing her had ended in defeat last month, when U.S. Bankruptcy Judge Shelley C. Chapman ruled that her failure to sign several parts of an earlier, out-of-court restructuring allowed the fashion house to legally fire her and withhold her golden parachute payment in the current Chapter 11 proceedings.
The document filed Tuesday indicates that Azria will appeal the decision but does not lay out her legal argument or any other supporting information. Both Azria and BCBG had sought to end the adversary proceeding quickly, ahead of a May 19 deadline for potential purchasers to bid on the company's assets.
The fashion house, founded by Max Azria in 1989, had filed for Chapter 11 protection in New York late last month with the hope of restructuring more than $500 million worth of debt. As part of its efforts to cut costs while continuing to operate, BCBG fired Lubov Azria on March 8, and two weeks ago moved to reject her employment agreement, saying it is in the best interest of the debtors' estates.
Also on Tuesday, BCBG moved to extend its exclusivity period, saying it needs more time to put together a well-crafted plan to restructure its sprawling business, which includes “five debtor entities” and “thousands of employees.”
The ailing retailer has already cut staff and closed 120 stores, it said, and has also reached out to 130 interested parties ahead of the May 19 sale, with 120 of those signing nondisclosure agreements.
BCBG said the lenders behind its asset-backed revolving credit facility and its tranche B lenders “do not object to” the request.
Over the past three decades, the high-end purveyor of womenswear grew to more than 550 stores across the U.S., Canada, Europe and Japan. Though the company has enjoyed years of success, it has seen a downturn in net sales over the past few years, declining more than 20 percent since 2014, from $785 million to approximately $615 million in the most recent fiscal year, according to court documents.
“The debtors’ progress to date has been achieved in no small part due to the breathing room provided by chapter 11,” the extension motion said. “In the midst of the marketing process, the Debtors believe that maintaining their exclusive right to file and solicit votes on a chapter 11 plan is critical to their ability to complete a value-maximizing process.”
Neither BCBG nor Azria responded Wednesday to requests for comment.
The debtors are represented by Joshua A. Sussberg, Christopher J. Marcus, James H.M. Sprayregen and Benjamin M. Rhode of Kirkland & Ellis LLP.
The Azrias are represented by Thomas E. Patterson, Robert J. Pfister and Sasha M. Gurvitz of Klee Tuchin Bogdanoff & Stern LLP and Martin D. Singer and Todd S. Eagan of Lavely & Singer PC.
The adversary case is Azria et al. v. BCBG Max Azria Global Holdings LLC et al., case number 1:17-ap-01040, and the bankruptcy is In re: BCBG Max Azria Global Holdings LLC et al., case number 1:17-bk-10466, both in the U.S. Bankruptcy Court for the Southern District of New York.
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