BCBG Max Azria Group, LLC Hands Out 492 Pink Slips

Money

According to paperwork filed with the California Department of Employment Development, 492 employees of fashion house BCBG Max Azria Group, LLC were given notice that they will be permanently laid off as of September 5. The layoff notices did not include BCBG’s retail employees.

The company filed for bankruptcy back in March after a third attempt in two years to rescue the business. The latest turnaround effort began at the start of 2017, when the chain starting closing 120 of its stores.

At the time, the company said it would either sell itself off at a court-supervised auction. If no acceptable bidders stepped up, management said it would try to negotiate a debt-for-swap with junior lenders owed $289.4 million.

The Vernon, California-based chain operated more than 570 stores worldwide, including more than 175 in the U.S. Because of changing consumer habits though, the company has seen sales plummet.

In August 2016, the company announced it permanently jettisoned 123 jobs. In March 2017, an additional 116 people were let go. The company noted at the time it was preparing more job cuts and other cost-cutting measures.

In June, BCBG Max Azria received a $165.0-million buyout bid from a consortium led by Marquee Brands LLC and Global Brands Group Holding Ltd. The move was approved by the U.S. Bankruptcy Court in New York, allowing the group to take over the intellectual property of BCBG Max Azria and to operate up to 22 of the brand’s retail locations.

Marquee owns Ben Sherman; Body Glove International, LLC; and Bruno Magli S.p.A. and will pay around $106.0 million for BCBG’s intellectual property. Global Brands owns Jones New York and Juicy Couture and will part with $23.0 million for inventory and the right to keep some retail stores open and operate BCBG;s e-commerce site.

Since 2016, BCBG has racked up $10.0 million in losses, but still operates 71 BCBG stores and 276 in-store shops (in Bloomingdale’s, Inc.; Dillard’s, Inc. [NYSE:DDS]; Lord & Taylor LLC; and Macy’s Inc [NYSE:M]).

The retail chain, which is majority owned by Guggenheim Partners, LLC and affiliates, has a debt load of nearly $490.0 million.

In addition to the U.S., BCBG Max Azria also had goings-on in Canada, Asia, and Europe. In March, the company announced it was shutting down its 51 stores in the Great White North.

There are 13 BCBG stores in Japan, but if no one takes them over, they too will be closed. In Europe, where most of the BCBG stores are in France, the bankrupt company would like a third party to operate the 34 stores. If that’s not an option, closing them is.

As an interesting side note, Lubov Azria, the company’s former chief creative director who was fired in March, filed a proof of claim earlier in July saying the bankrupt company owes her $6.7 million for lost wages and severance pay.

This comes after Azria filed a labor contract lawsuit against BCBG saying she was illegally dismissed and was owed $7.0 million for wages and a “golden parachute” (compensation for being let go due to a takeover or merger) payout. The bankruptcy court dismissed this lawsuit.

Sources:

WARN Report,” State of California Employment Development Department, last accessed July 12, 2017.

WARN Report,” State of California Employment Development Department, last accessed July 12, 2017.

Bankruptcy Court Approves Stalking Horse Bid for BCBG Max Azria,” California Apparel News, June 27, 2017.

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