Fashion house BCBG Max Azria prepares for bankruptcy -sources

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By Jessica DiNapoli

<span class="articleLocation”>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 favor 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 specialty 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.

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.

In 2015, BCBG restructured its debt and received a $135
million cash infusion from investors including affiliates of
Guggenheim.

BCBG was founded by Tunisian fashion designer Max Azria in
1989 and grew through its retail shops and distribution in
department stores including Saks Fifth Avenue and
Bloomingdale’s. It also acquired Herve Leger, maker of
skin-tight dresses, and started a lower-cost line called
BCBGeneration.

Azria is no longer at the helm of the company.

In the call with landlords last month, one of BCBG’s
advisers said the company’s retail store business declined by 20
percent over the past three years. The company reported
consolidated net sales of just over $600 million in the 12
months to December, according to the call.

Retail accounted for 71 percent of its revenue, while
wholesale accounted for 18 percent, according to the call. The
percentage share for licensing and e-commerce sales were in the
single digits.



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