IG Design Group Americas and its domestic subsidiaries, a design, manufacturing, sourcing and distribution company of branded and private label consumer products, has voluntarily filed for Chapter 11 relief in the United States Bankruptcy Court for the Southern District of Texas to facilitate a court-supervised marketing and sale process pursuant to section 363 of the Bankruptcy Code.
The company intends to pursue a value maximization strategy by engaging with buyers who are interested in purchasing certain of the company’s business segments as a going concern, while concurrently winding down its domestically manufactured woven ribbon products business and supporting assets.
The company’s decision to pursue an in-court process was driven by liquidity constraints, substantial working capital requirements and the seasonal nature of significant portions of its business.
“Following DGA’s sale to an affiliate of Hilco Capital Group, we have worked diligently with our advisors to evaluate the optimal path forward for the business,” Sue Buchta, CEO of DGA, said. “We enter the court-supervised sale process in dialogue with multiple interested parties for certain of our business segments as a going concern and intend to leverage Chapter 11 to maximize the value of our assets. We thank our employees, customers and partners for their support and will work diligently to minimize any potential impact during the process.”
DGA has secured an agreement for approximately $53 million in committed debtor-in-possession financing from an affiliate of Hilco to support its value maximizing strategy throughout its Chapter 11 cases, subject to court approval.
Additionally, to uphold its commitments to its stakeholders, DGA has filed several customary “first day” motions. These motions, upon approval by the court, will provide authorization for the continued payment of employee wages and benefits arising under programs that were in effect as of the petition date, the maintenance of certain customer programs, payments to certain critical vendors for prepetition amounts owed, payment to vendors for amounts owed on post-petition goods and services delivered to the company and other relief measures standard in these circumstances.
DGA’s non-U.S. affiliates are not part of the Chapter 11 cases and will continue to operate while the company considers the impact of asset sales and the optimal plan to maximize the value of the interests it holds in those subsidiaries.
Latham & Watkins is serving as legal counsel, Huron Consulting Group is serving as financial advisor and investment banker, and C Street Advisory Group is serving as strategic communications advisor to DGA.
