BCBG Max Azria Group Inc., a Vernon fashion house founded by designer Max Azria, filed for Chapter 11 bankruptcy protection last week.
The company reported liabilities of $651 million, including $377 million in secured debt owed to a unit of Guggenheim Partners Investment Management, and assets of just $223 million.
“Unfortunately, like many other apparel and retail companies, BCBG has fallen victim in recent years to adverse macro-trends, including a general shift away from brick-and-mortar to online retail channels, a shift in consumer demographics away from branded apparel,” Holly Felder Etlin, a managing director at AlixPartners who is acting as the company’s restructuring officer, said in papers filed March 1 in U.S. Bankruptcy Court in New York.
The fashion company, which employs about 4,800 people, began closing some of its 550 stores this year, with plans to shutter 120, mostly within the United States. It will begin the sale process for locations that are not closing on March 10, according to the filing.
BCBG – an acronym for the French phrase “bon chic, bon genre,” meaning “good style, good attitude” – was founded in 1989 and sells high-end women’s apparel and accessories. Over the years, it spread to Canada, Europe, and Japan.
Guggenheim arranged $200 million in financing for the company for, among other goals, a 2006 expansion that was to result in more brick-and-mortar stores. Coupled with the effects of the recession and shifting consumer habits toward online sales, BCBG implemented an out-of-court restructuring in early 2015.
As part of those transactions, Azria relinquished his majority equity position and retired in August from his role as BCBG’s chief executive officer.
The company said in its bankruptcy filing that it has obtained $45 million in new financing and plans to reorganize.
“The steps we are taking now, to address the shift in customer shopping patterns and the growth of online shopping, will allow us to focus on our partner relationships, digital, e-commerce, selected retail locations, and wholesale and licensing arrangements,” Marty Staff, acting interim chief executive, said in a statement.
Jack Tracy, head of legal analysis at financial services company Debtwire, said he has seen a commonality within the struggling U.S. retail sector.
“Brick-and-mortar stores have an extensive footprint, lease obligations, and high costs,” he said.
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