Collected Group’s restructuring plan obtains bankruptcy court approval

Signage is seen in the United States Bankruptcy Court for the Southern District of New York in Manhattan, New York City, United States, August 24, 2020. REUTERS / Andrew Kelly

Fashion brand owner The Collected Group LLC has secured court approval for its prepackaged reorganization plan that will give lenders control of the business.

Gathered, represented by Paul, Weiss, Rifkind, Wharton & Garrison, is expected to come into effect this week after U.S. bankruptcy judge Laurie Selber Silverstein in Wilmington, Delaware, approved the plan during ‘a virtual hearing on Tuesday. The plan, backed by private equity giant KKR & Co Inc, is expected to eliminate $ 150 million of the company’s $ 185.3 million funded debt and allow the company to restructure around its online business. and wholesale.

KKR, represented by Proskauer Rose, was already the largest owner and lender of Collected. He will maintain his grip on the company alongside his fellow lender Callodine Commercial Finance LLC.

Collected, which owns the Joie, Current / Elliott and Equipment labels, filed for bankruptcy in April. At its peak, the company had 33 stores and had celebrities from Jennifer Aniston to Meghan Markle as clients of its brands. After seeing sales drop dramatically amid the COVID-19 pandemic, the company closed its stores, focused on its online business, and secured new funding from lenders.

In the fourth quarter of 2020, Collected reopened three of its stores in Boston, Greenwich, Connecticut and Newport Beach, California. But those reopened locations did not perform well, leading the company to conclude that physical retail operations were no longer a viable option.

Although the company had sought out potential buyers in the months leading up to the bankruptcy, none of the offers it came to provided high enough value for the company, restructuring director Evan Hengel said in documents. judicial.

Gathered initially proposed a plan that would have left general unsecured creditors, who are owed $ 35.5 million, unpaid. The company has since reached a settlement with its committee of unsecured creditors, represented by Kelley Drye & Warren, which offers them collections. The plan now offers these creditors $ 500,000 in cash and the possibility of receiving up to $ 2 million more if the business is sold after bankruptcy.

The lenders have also agreed to provide $ 14.5 million in exit financing.

While retail bankruptcies have been a constant throughout 2020, with the pandemic putting an end to foot traffic in physical stores, the trend has largely eased in 2021.

The case is In re The Collected Group, US Bankruptcy Court, District of Delaware, No. 21-10663.

For collectors: Brian Hermann, John Weber and Brian Bolin from Paul, Weiss, Rifkind, Wharton & Garrison; and Pauline Morgan, Andrew Magaziner and Joseph Mulvihill of Young Conaway Stargatt & Taylor

For the committee: Eric Wilson, Jason Adams and Lauren Schlussel of Kelley Drye & Warren; and Christopher Samis and Katherine Good from Potter Anderson & Corroon

Our Standards: Thomson Reuters Trust Principles.

Maria chutchianMaria Chutchian reports on bankruptcies and corporate restructurings. She can be reached at maria.chutchian@thomsonreuters.com.

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