Ernst & Young, appointed as administrators when the business became insolvent in May, told news.com.au that G-Star Raw’s inability to generate a viable buyer over the past many weeks reflects the “high level of uncertainty regarding the future prospects for the retail sector in Australia.”
The U.S. arm of Dutch-owned G-Star Raw Retail Inc. filed its own voluntary Chapter 11 bankruptcy court petition in July in Los Angeles, listing its landlord at Manhattan’s 475 Fifth Avenue, owed $426,007, as its largest unsecured creditor.
Shortly after the U.S. filing, a corporate restructuring sheared 10 percent of G-Star’s headcount from payroll, including 150 in the Netherlands headquarters.
An L.A. federal bankruptcy court set the deadlines for when a reorganization plan will be confirmed. G-Star’s U.S. arm still needs to solicit the support of its constituency group, and if all goes well, the denim brand could exit Chapter 11 proceedings by October or November.
The Aussie business’s shutdown marks the latest devastation in denim and in fashion retail at large. Lucky Brand Dungarees was plucked from bankruptcy in a $191.5 million deal by the dynamic duo of Authentic Brands Group and Simon Property Group, though Stage Stores is liquidating stores and Stein Mart is too, while hoping to hand off its e-commerce and intellectual property to a buyer.