Just two months after petitioning a Bermuda court for a provisional liquidator to retool its business, Global Brands Group Holding (GBGH) Ltd. has decided to wind down operations.
In a regulatory filing this week in Hong Kong, GBGH said it had planned on a “holistic restructuring plan” for the group, but despite its best efforts, was unable to garner the required level of support from lenders to implement the plan. The once powerful apparel manufacturer said it continues to “experience a severe lack of liquidity.” Hurting its restructuring chances was the filing by its U.K. arm for a pre-packaged administration, as well as the insolvency of its European operations. The company was set for a hearing in the Supreme Court of Bermuda on Friday, which is overseeing its insolvency petition, one that is now expected to include a request to allow it to liquidate operations.
GBGH said in the filing that the liquidity of its European wholesale business continues to be strained due to lack of cash flow, and that its German subsidiary, TVM Europe GmbH, filed for insolvency proceedings last month in Düsseldorf.
In addition, GBGH’s major subsidiaries in the U.K., which include TVM Fashion Lab and GBG Europe Footwear & Accessories (GBG F&A), completed a prepackaged administration filing on Nov. 2.
Also on Nov. 2, GBG F&A completed the sale of its fashion and footwear brand Fiorelli to Centric Brands Holding (CBH) LLC for $3.3 million. CBH, incorporated in England and Wales, is the European arm of U.S. brand management firm Centric Brands LLC. Centric Brands itself had to seek bankruptcy court protection in May 2020. The company was essentially cash-flow insolvent as the pandemic impacted its wholesale accounts. Following a financial reorganization of the its balance sheet, Centric successfully emerged from Chapter 11 in October 2020.
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GBGH’s North American arm, Global Brands Group (GBG) USA, has completed the sale of three brands under its licensing umbrella as it raises cash to clear a mountain of debt.
The brands that are under new ownership are outdoor and workwear lifestyle brand Ely & Walker and two footwear brands, Frye and Aquatalia, according to Manhattan bankruptcy court records.
Three other brands in GBG’s portfolio—Sean John, Juniper and AIRBAND—are still in the bidding and auction stages, with completion dates expected around the end of November, according to a regulatory filing by corporate parent Global Brands Group Holding (GBGH) Ltd. in Hong Kong.
The Ely & Walker brand has been sold to TAJ Imports (TAJ) for $750,000, plus the assumption of certain liabilities. According court records, David Skatoff, partner at Ducera Securities, said he pitched the Ely & Walker assets to more than 50 potential buyers and entered into confidentiality agreements with over 40 to give them access to a “data room” for continued due diligence. The process took four months before TAJ emerged as the buyer. The bankruptcy court approved the sale last month.
Authentic Brands Group (ABG) took back its master license for Frye on June 30 after GBG was unable to fulfill its responsibilities under the licensing agreement.. The brand management firm was already a co-owner of the brand, having acquired a majority stake from GBG in 2017. ABG also paid $6.7 million to acquire the inventory GBG held for the Frye brand. ABG has since transferred the Frye license to Footwear Unlimited, who will now design, manufacture and distribute a range of footwear categories for the brand in the U.S. Presuming ABG follows its playbook, the Frye brand will soon see an expansion into other categories, such as small leather goods, hosiery and accessories. Separately, ABG also took its licenses for the Spyder brand.
GBG entered into a stalking horse agreement with WH AQ Holdings and Hilco Brands for the Aquatalia label at a price of $17.3 million. Saadia Group LLC outbid WH AQ Holdings, becoming the new owner of the upscale footwear brand for $22.75 million. Saadia’s purchase closed last month. The company has been busy with its digital revivals of the New York & Company, Lord & Taylor and Fashion to Figure brands.
GBG filed its Chapter 11 petition for bankruptcy court protection in July. The company was hard hit by the ongoing structural shifts in retail, as well as the pandemic last year. GBG CEO Rick Darling said at the time of the bankruptcy filing that “persistent geopolitical tensions” had also disrupted supply chains. But GBG had other struggles to deal with, including two lawsuits filed by Sean “Diddy” Combs against GBG subsidiary GBG Sean John USA. One was over publicity rights and the other in connection with the use of a trademarked slogan. Combs sold the majority of his streetwear label Sean John to brand management agency CAA-GBG in 2016.
CAA-GBG is a separate entity and was not a part of GBG’s bankruptcy filing. Neither was parent firm GBGH at the time, although two months later in September, GBGH petitioned the Supreme Court of Bermuda for the appointment of a “provisional liquidator” for the sole purpose of helping the company retool operations. Given ongoing liquidity constraints, that’s no longer an option.
In the regulatory filing, GBGH said that it posted $175 million in revenue for the six months ended Sept. 30, representing a 40.2 percent decline from the same 2020 period. It also saw a wider operating loss of $99 million from a loss of $69 million a year ago.