Bankrupt BCBG Seeks Go-Ahead for $131M Asset Sale

BCBG Max Azria Group LLC asked a New York bankruptcy court Friday to approve a $131 million sale of intellectual property, stores and other assets, with a hearing for the clothing retailer's Chapter 11 plan slated for next month.

At the same hearing Friday, the debtor asked for and received a July 25 date for the plan hearing. BCBG counsel also said the asset sale — which would split BCBG’s intellectual property and wholesale and retail business between two companies — will pay off creditors, ensure the business will continue operations and keep at least some of its stores open.

“We have a transaction that will result in a going-concern transaction,” BCBG's attorney Joshua Sussberg of Kirkland & Ellis LLP told the court.

Under the proposed sale, New York-based Marquee Brands — a brand acquisition, licensing and development company — will acquire the rights to BCBG’s intellectual property for $108.1 million, while Hong Kong-based apparel, footwear and fashion accessories company Global Brands will take over marketing, sale and distribution of BCBG brands along with the debtor's wholesale operations, online sales platform, and approximately 20 stand-alone brick-and-mortar locations for $23 million.

Kirkland's Benjamin Rhode said on BCBG's behalf that approximately 50 stores will be closing.

Marquee would be paid a $3.2 million breakup fee and $345,000 in expenses under the planned sale.

The deal also calls for Marquee to provide BCBG creditor Allerton Funding LLC with a junior share interest in the intellectual property royalties until the $55 million in loans Allerton made to BCBG are paid off.

In court Sussberg said the overall Chapter 11 plan calls for creditor Guggenheim Partners to receive $1.75 million and the unsecured creditors, $900,000.

The plan has the approval of Allerton and Guggenheim, and the unsecured creditor’s committee has advised the unsecured creditors to vote in favor, Sussberg said.

The revised plan also contains an explanation on how Chubb Group insurance policies and claims involving Chubb policies will be handed, added in response to a Chubb Group objection complaining the plan did not explain how the issues were to be handled.

At the hearing Bankruptcy Judge Shelley C. Chapman rejected a request by the U.S. trustee for a privacy ombudsman to oversee the sale and a request that the plan ballot be changed from an opt-out to an opt-in ballot, which Brian Masumoto, representing the trustee, argued would provide better affirmative consent due to the failure of many creditors to fully read and understand plan ballots.

“I live in a world where people read the ballot,” Judge Chapman said.

She approved a timetable that set a plan hearing for July 25.

The fashion house, founded by Max Azria in 1989, had filed for Chapter 11 protection in March, with the hope of restructuring more than $500 million worth of debt.

Over the past three decades, the high-end purveyor of womenswear had grown to more than 550 stores across the U.S., Canada, Europe and Japan. Although the company 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.

BCBG is represented by Joshua A. Sussberg, Christopher Marcus, James H.M. Sprayregen and Benjamin M. Rhode of Kirkland & Ellis LLP.

The U.S. trustee is represented by Brian S. Masumoto of the U.S. Department of Justice.

The case is In re: BCBG Max Azria Global Holdings LLC et al., case number 1:17-bk-10466, in the U.S. Bankruptcy Court for the Southern District of New York.

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