Ann Taylor’s owner could be out of bankruptcy before Thanksgiving.
Bankrupt Ascena Retail Group has a hearing on Oct. 23 to confirm its reorganization plan and, once approved, can expect an exit court proceedings about two weeks later.
The company said the reorganized company will have a “stronger balance sheet and operating structure.”
Ascena filed a voluntary Chapter 11 petition for bankruptcy court protection in July, and is closing about 1,600 stores. The company was expected to whittle down its store base to 1,200, but instead will exit bankruptcy with 1,300 doors. Many locations that had been temporarily closed due to the coronavirus pandemic just never reopened.
The company sold its Catherines plus-size nameplate last week for $40.8 million to FullBeauty Brands Operations LLC. It will continue to operate the Ann Taylor, Loft, Lane Bryant, Justice and Lou & Grey brands.
Ascena has already received the nod from a bankruptcy court in Richmond, Va., on its disclosure statement, setting the stage to now solicit votes from different creditor groups on its plan of reorganization. The retailer already has the support of 95 percent of its secured term lenders. The reorganization is expected to reduce Ascena’s debt by about $1 billion.
The company’s $400 million asset-based lending facility and a $312 million term loan, which includes $150 million in new money, forms the basis of its debtor-in-possession financing facility. That DIP facility will convert to exit financing once Ascena emerges from Chapter 11.
“We are in the final stages of implementing our store closure plans across brands, which is expected to reduce our overall footprint to approximately 1,300 locations, and are continuing rent discussions with our landlord partners for our go-forward stores,” Ascena CEO Gary Muto said. “In addition, as part of our ongoing corporate expense reduction plan, we have now exited and consolidated our corporate offices. Collectively, we believe these actions will enable us to strategically invest in the business and generate sustainable, profitable growth once we emerge from the Chapter 11 process.”