NEW YORK, United States — Fashion house BCBG Max Azria got court permission to borrow $15 million to help carry it through a bankruptcy process that will culminate in an asset auction.
US Bankruptcy Judge Shelley C. Chapman said at a hearing Thursday in Manhattan that she would approve the initial debtor-in-possession financing. Vernon, California-based BCBG will to return to her court later to seek an additional $30 million.
The company needs the money so it can continue selling inventory to pay creditors, who are owed $459 million, according to a court filing. BCBG said it’s soliciting bids for the sale of “some or all” of its assets at a May auction. Chapman must approve any sale procedures.
The company filed for Chapter 11 protection on Feb. 28, blaming “adverse” trends including competition from online merchants and a consumer shift away from branded clothing. Many U.S. apparel retailers have been struggling to survive in the new shopping environment. Wet Seal filed for bankruptcy last month to liquidate. American Apparel entered in Chapter 11 November and sold assets to Gildan Activewear Inc.
BCBG will use $5 million of the financing to reduce debt and the other $10 million to fund operations. Chapman scheduled a final hearing on the loan for March 28.
By Nico Grant; editors: Christopher DeReza, Andrew Dunn and Michael Hytha.