GBG USA, an indirect, wholly-owned subsidiary of Global Brands Group, commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of New York. The group’s global brand management and Europe wholesale businesses are separate legal entities from GBG USA and are not included in this filing and continue to maintain ongoing operations.
In conjunction with the filing, GBG USA entered into an asset purchase agreement with WH AQ Holdings (as purchaser) and Hilco Brands (as guarantor) pursuant to which WH AQ Holdings and Hilco Brands will serve as the stalking horse bidders in a court-supervised sale process for GBG USA’s Aquatalia brand and business. The stalking horse bid provides a purchase price of $17.3 million and the APA is subject to higher or otherwise better offers, among other conditions.
GBG USA is also pursuing the sale of a substantial portion of its remaining assets, including Ely & Walker, AIRBAND, MagnaReady, Yarrow, b New York and JUNIPERunltd, in accordance with Section 363 of the U.S. Bankruptcy Code and court-approved bidding procedures.
These actions follow the recent sale of the group’s South Korean Spyder business to Alpha Vista Investment, the sale of Spyder USA’s inventory and related assets to Liberated-Spyder and the sale of Frye’s inventory and related assets to ABG Frye.
“Over the past 18 months, the retail landscape has been greatly impacted by COVID-19, creating hardships for us and many others across our industry. Our business has also been impacted by ongoing structural shifts in the retail industry, as well as persistent geopolitical tensions that have disrupted supply chains. These factors have been especially detrimental to GBG USA,” Rick Darling, CEO of Global Brands Group, said. “We have taken significant steps over the last year to strengthen GBG USA’s financial position while also conducting a thorough review of all strategic options for GBG USA and its brands. This process resulted in the successful sales of our South Korean Spyder retail operation, the inventory and related assets for two of our brands, Spyder and Frye, and an APA for our Aquatalia brand and business. As for GBG USA’s remaining assets, we determined that a court-supervised process to facilitate a sale is the best course of action to maximize value for all stakeholders and address the financial position of GBG USA and the group in a fair and transparent manner. GBG USA has compelling brands and products and a highly talented team, and we believe this process represents the best opportunity for GBG USA’s employees and business.
“The U.S. proceedings do not involve the group’s separate European wholesale and brand management businesses, which are continuing to maintain ongoing operations. We have taken and continue to take measures to help improve performance, reduce the cost base and improve working capital of the European wholesale business. The brand management business remains robust and profitable. I am extremely grateful to our employees across the globe who have demonstrated agility and dedication while continuing to serve our customers and supply chain partners in this period of uncertainty.”
The recent sales of Spyder and Frye’s inventory and related assets provided GBG USA with cash collateral to meet its immediate liquidity needs. This has also reduced the need for supplemental debtor-in-possession (DIP) financing for the Chapter 11 process. GBG USA has further received $16 million in DIP financing from ReStore Capital to support its additional liquidity needs during the Chapter 11 process.
GBG USA has also filed a number of customary motions with the court seeking authorization to support its operations, including authority to continue payment of employee wages and maintain healthcare benefits and other relief measures customary in these circumstances.
Willkie Farr & Gallagher is serving as GBG USA’s legal counsel, Ankura Consulting Group is serving as GBG USA’s restructuring advisor and Ducera Partners is serving as GBG USA’s financial advisor.
