Premium denim-maker True Religion Apparel Inc. filed for Chapter 11 bankruptcy protection Wednesday in U.S. Bankruptcy Court in Delaware.
The Manhattan Beach company reached an agreement with its owner, New York investment firm TowerBrook Capital Partners, and the majority of its term loan lenders to reduce its debt by more than $350 million, which it expects the court to approve in three to four months, it said in a press release.
The agreement would allow it to keep operating after the bankruptcy.
True Religion posted a net operating loss of $78.5 million for the year ended Jan. 28 as a result of the shift to online shopping and a decline in the premium denim market, it said in bankruptcy documents.
“Like several other national retailers such as Quicksilver, Pacific Sunwear, American Apparel, Aeropostale, and BCBG, to name a few, the company has been adversely affected by a macro consumer shift away from brick-and-mortar to online retail channels, among other factors, resulting in recent losses,” the company said.
Analysts at Moody’s Investors Service Inc. and Standard & Poor’s Financial Services told the Business Journal in February that there was a strong chance the company would default on its debt in the next year and a half.
The company had $243.3 million in assets and $534.7 million in liabilities on a consolidated basis for the year ended Jan. 28, according to its filings.
The then-public company had about 3,000 employees in 2013 before TowerBrook acquired it for $835 million, according to documents filed with the U.S. Securities and Exchange Commission. Today it has more than 1,900 employees and 140 retail stores, according to its bankruptcy filing.
Caroline Anderson is a staff reporter covering retail, restaurants and hospitality. She can be reached at firstname.lastname@example.org.