BCBG prepares for Bankruptcy….Hundreds of stores may close
More bad news for retail as BCBG is heading toward imminent bankruptcy. According to this BOF report, the chain is behind on its rent and ready to close its doors soon if an agreement can’t be worked out.
BCBG Max Azria Group LLC, whose form-fitting party dresses have been worn by celebrities Selena Gomez, Drew Barrymore and others, is making preparations to file for bankruptcy as soon as next week, people familiar with the matter said on Friday.
The fashion house is the latest casualty in the struggling U.S. retail sector, as shoppers abandon malls in favour of internet shopping. BCBG has already informed mall owners of its plans to shutter most of its approximately 200 U.S. stores.
BCBG is working with its financial and legal advisers to prepare the bankruptcy filing, the people said, asking not to be identified because the plans are confidential. It is possible that some companies, including brand licensing firms, may seek to buy BCBG’s assets in bankruptcy, the people added.
BCBG declined comment. Its owner, investment firm Guggenheim Partners, did not respond to requests for comment.
Competing speciality retailers, including The Limited and American Apparel, have also filed for bankruptcy in recent months and are closing down their stores.
In a call with landlords in January, a recording of which was heard by Reuters, BCBG said it preferred an alternative to bankruptcy as it looked to slash its secured debt load of $485 million (389.09 million pounds).
However, BCBG is behind on its rent, and bankruptcy would have the advantage of shielding it from legal action by landlords, which have been put under pressure by a wave of retail bankruptcies and shuttered stores.
The upcoming bankruptcy is a fall from grace for BCBG, an acronym for the French phrase “bon chic, bon genre,” which means good style, good attitude, and originally referred to stylish, well-to-do Parisians. Reuters reported in 2013 that it was exploring a potential sale that could have fetched as much as $1 billion.