True Religion Apparel Inc. is getting ready to exit Chapter 11 bankruptcy court protection.
The bankrupt denim firm on Monday received approval from the Delaware bankruptcy court this week to proceed with its reorganization plan after it reached a settlement a group holding term loans totaling $65.8 million. Under the terms of the settlement, they will own 88 percent of the equity in the reorganized company. That’s a bit less than the 95 percent stake that was initially proposed.
The plan also provides for unsecured creditors, who hold about $45 million to $50 million in total claims, are expected to get a full recovery.
True Religion filed its voluntary Chapter 11 petition for bankruptcy court protection in April. It has since cut its store base down to about 50 doors from roughly 75. The filing marked its second bankruptcy petition, the so-called Chapter 22, three years after its first tour in 2017.
True Religion was also among the first of a number of fashion firms that sought bankruptcy court protection as a result of temporary shutdowns due to the coronavirus, or Covid-19, outbreak in March. Other firms that followed with Chapter 11 filings of their own included J. Crew Group, Neiman Marcus Group, J.C. Penney Co. Inc. and Tailored Brands Inc. Both J. Crew and Neiman have since exited Chapter 11 proceedings, while Penney and Tailored Brands are still operating under court protection.
The upscale premium denim brand, founded by Jeff Lubell in 2002, was subsequently acquired by private equity firm TowerBrook Capital Partners for $835 million in 2013. Lubell stepped down as the CEO in 2013 after True Religion opted not to renew his contract. At the time, the denim company operated about 150 stores, with 120 in the U.S. and 30 overseas.