Denim specialist Lucky Brand Dungarees, LLC has become the latest apparel firm to fall victim to the financial pressures of the coronavirus pandemic, having filed for Chapter 11 bankruptcy protection.

In a statement on Friday (3 July), Lucky Brand said it had lodged the voluntary petitions in the US Bankruptcy Court District of Delaware and has entered into a stalking horse asset purchase agreement with SPARC Group LLC for the sale of substantially all of the company’s operating assets. SPARC operates lifestyle brands including Aéropostale and Nautica, which are owned by Authentic Brands Group LLC.

In connection with the transaction, ABG-Lucky LLC, a newly formed subsidiary of Authentic Brands Group, will acquire all the intellectual property assets of Lucky Brand. 

Meanwhile, Lucky Brand has also entered into a “back-up” asset purchase agreement for the sale of the company’s and such affiliates’ intellectual property and certain other assets to ABG-Lucky LLC. It noted the deal will only come into effect if the asset purchase agreement with SPARC terminates under certain circumstances.

The firm added it has received new financing commitments from certain of its existing lenders that will provide sufficient liquidity to fund it through the closing of the sale.

It will continue to operate in the ordinary course during the Chapter 11 process and will continue to explore potential sale transactions with other parties to achieve the highest or otherwise best offer for the company. 

“The Covid-19 pandemic has severely impacted sales across all channels. While we are optimistic about the reopening of stores and our customers’ return, the business has yet to recover fully,” said interim-CEO Matthew Kaness. “We have made many difficult decisions to preserve the company’s viability during these unprecedented times.

“After considering all options, the board has determined that a Chapter 11 filing is the best course of action to optimise the operations and secure the brand’s long-term success. We remain committed to our associates, vendors, and business partners and appreciate the continued support through this process.”

The Los Angeles-based company currently has about 200 locations in North America and is sold in select department stores and independent boutique retail locations. 

The US retailer is one of a number to fall casualty to the coronavirus crisis, including retail giant JCPenney, which filed for Chapter 11 bankruptcy protection in May alongside J.Crew and Neiman Marcus.