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True Religion Files For Chapter 11

Bankruptcy has claimed another iconic brand.

Jeans maker and retailer True Religion announced Wednesday that it has filed for Chapter 11 and signed a restructuring agreement with most of its lenders.

Rumors of bankruptcy began last year after TowerBrook, the investment management firm that purchased True Religion in 2013, bought back $22.8 million of the company’s first lien term loan for $14.4 million. The brand, known for embellished denim, has struggled to compete with discount retailers, online competition and the onslaught of athleisure apparel.

In signing the restructuring agreement with lenders, including TowerBrook Capital Partners, True Religion stated that it will reduce its debt by over $350 million and convert it into the substantial majority of the reorganized company’s equity.

“After a careful review, we are taking an important step to reduce our debt, reinvigorate True Religion’s iconic brand and position the company for future growth and success,” said True Religion President and CEO John Ermatinger. “By dramatically improving our capital structure 24 months in advance of our term loan maturity, we will continue business operations as usual and provide our employees and business partners the long-term stability they need, while providing the necessary flexibility to invest in growing our digital footprint, building connections with customers, and improving organizational competencies.”

The company maintains that vendors, suppliers and landlords are expected to be paid in full and that it will operate its business without interruption to customers, employees and business partners.

True Religion has hope for a rebound. Ermatinger noted that year-to-date adjusted EBITDA through May increased 95 percent. He added, “This improved performance will allow us to enter into the next phase of our recapitalization process with confidence as we continue to execute against our strategic plan and drive the business forward.”