Just two months after petitioning a Bermuda court to appoint a provisional liquidator to help it financially restructure, GBGH moved to convert the case to a liquidation. The court’s order on Friday said that John C. McKenna of Finance & Risk Services Ltd., who was named provisional liquidator, will stay on with full authority, reversing previous orders to operate with limited power. Although GBGH shares had been trading on the Hong Kong Stock Exchange, the company filed its insolvency petition in Bermuda, where it is incorporated.
According to a GBGH statement filed with Hong Kong regulators, the company currently doesn’t expect to have funds leftover after paying creditors or have anything left for shareholders.
In a filing last week with Hong Kong regulators, GBGH said it’s planning for a “holistic restructuring,” but was unable to gather the required backing from lenders. In addition, increasingly strained liquidity at its European wholesale operation accelerated its insolvency petition last month in Düsseldorf. That was followed by a similar petition by its U.K. subsidiary on Nov. 2.
GBG’s North American arm, Global Brands Group USA (GBG USA), had already filed its Chapter 11 bankrtupcy petition in July, and has begun selling off assets.
GBGH, which had spun off from former parent Li & Fung in 2014, blamed the coronavirus pandemic and retail’s structural shifts for hampering its financial position. The company estimated $222 million in operating losses for the year ended March 31, 2021. About 91.9 percent of that was attributable to GBG USA.
Brand management firms haven’t fared well during the global pandemic, as critical wholesale partners like department stores and other retailer shuttered under government Covid-19 mandates. Centric Brands Inc. was among the first to file for Chapter 11 protection. It successfully emerged a few months later after restructuring.
In contrast, Marquee Brands, backed by Neuberger Berman, appears to be on firm footing. On Sept. 21, the company said the Martha Stewart brand it acquired in April 2019 has a new online platform that now includes housewares, kitchen goods, garden essentials and apparel. Perhaps the most successful of the brand management firms is Authentic Brands Group (ABG), which in July filed paperwork with the Securities and Exchange Commission indicating an intent to go public. A successful initial public offering could give ABG a valuation in the $10 billion range.