The brand management firm, whose fashion, footwear and accessories portfolio includes Sean John, Katy Perry, Skechers and Allsaints, petitioned the Supreme Court of Bermuda to appoint a “provisional liquidator” on a “limited powers” basis to retool operations.
On Friday, GBG applied to name Finance & Risk Services’ John C. McKenna as the provisional liquidator, a move that would give the company time to enact a “group-wide holistic and coordinated debt restructuring plan,” as opposed to “disorderly liquidation.” The application will be heard on Sept. 16.
GBG said it’s considering raising cash through third-party investors via an “equity issue,” and might also shed some assets. Other options could include restructuring debt by refinancing or “a compromise or arrangement of debts and liabilities,” it said in a statement.
The new legal maneuvering comes after the brand manager’s North American arm, GBG USA, filed for Chapter 11 bankruptcy in July. GBG’s management and its European wholesale businesses are separate entities, and were not part of the U.S. petition.
GBG blamed the pandemic and retail’s structural shifts for hampering its financial position. It estimated $222 million in operating losses for the year through March 31, 2021, with 91.9 percent attributable to GBG USA.
Sources said trouble had been brewing for some time. After GBG spun off from former parent Li & Fung in 2014, much of the North American licensing business was sold in 2018 for $1.2 billion to Differential Brands Group, which rebranded as Centric Brands, filed for bankruptcy in May 2020, and restructured in October. Debt, long a thorn in GBG’s side, is what ultimately led the company to sell some of its licensing business to Differential, sources said.
At the company’s request, the Hong Kong Stock Exchange suspended GBG shares from trading on July 2, 2021 until further notice.
Companies of this ilk have had a tough go of it recently. Sequential Brands, the owner of Jessica Simpson and other popular labels, finally collapsed into bankruptcy last week. Authentic Brands Group, by contrast, bucked the brand management trend when it filed for an initial public offering in July with an eye toward a $10 billion valuation.