Collected Group’s restructuring plan gets bankruptcy court approval

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

  • Plan eliminates $ 150 million in debt
  • Approval follows settlement with junior creditors
  • Lenders will provide exit financing

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

Collected, 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 signed the the plan during a virtual hearing on Tuesday. The plan, which is 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 business. online 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, owner of 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 brick-and-mortar retail operations were no longer a viable option.

Although the company searched for potential buyers in the months leading up to the bankruptcy, none of the offers received provided high enough value for the company, said Evan Hengel, director of restructuring. said in court papers.

Collected initially proposed a plan that would have left general unsecured creditors, who are owed $ 35.5 million, unpaid. The company has since reached an agreement with its committee of unsecured creditors, represented by Kelley Drye & Warren, which provides them with collections. The plan now offers these creditors $ 500,000 in cash and the option 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 retailer bankruptcies have been a constant throughout 2020 as the pandemic halted foot traffic in physical stores, the trend has largely faded in 2021.

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

For Collected: 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.


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