BCBG Maz Azria is the latest fashion house to succumb to retail’s changing landscape.
According to sources, BCBG Max Azria Group LLC, the style empire behind the red-carpet looks of many celebrities, is preparing to file for bankruptcy next week, Reuters reported. The fashion house has already notified mall owners about its plans to close most of its U.S. stores.
BCBG is allegedly working with its financial and legal advisors to draft the bankruptcy filing and it is possible that some businesses, including brand licensing firms, could be interested in acquiring BCBG’s assets.
Last month, BCBG held a call with landlords and indicated it desired another solution instead of bankruptcy for its secured debt load of $485 million. BCBG currently owes rent expenses and bankruptcy could protect the fashion house from being brought to court by landlords, who have endured retail bankruptcies and store closures in the past few years.
On the call, one of BCBG’s advisors noted that the retailer’s brick-and-mortar business decreased by 20 percent since 2014. The call also said retail accounted for 71 percent of BCBG’s revenue, which is a significant portion of BCBG’s market presence.
BCBG’s recent Chapter 11 plan follows the company’s ongoing financial demise. Last Month, BCBG said it intended to restructure its business and shutter locations, due to debt and declining store traffic. Last year, founder Max Azria resigned from his position, which was followed by the departure of BCBGeneration creative director Joyce Azria in August. Although BCBG received a $135 million infusion from investors in February 2015, the company is still struggling to improve its future financial outlook.
BCBG and its owner, investment firm Guggenheim Partners, have not commented on the alleged filing.