California Apparel News

Three months after filing for Chapter 11 bankruptcy protection, BCBG Max Azria has received a bid that would keep the Los Angeles brand alive and retain about 20 stores in its retail fleet.

The total buyout price put forth on June 9 by a consortium led by Marquee Brands totals $165 million. Marquee would pay $108 million for the Los Angeles label’s intellectual property. Marquee, which owns British menswear brand Ben Sherman, surf line Body Glove and Italian fashion label Bruno Magli, hopes to grow BCBG and related brands into new product categories, distribution channels and geographies.

Global Brands Group Holding, another member of the consortium, would pay $23 million for inventory and the right to keep as many as 22 retail outposts as well as operate the BCBG e-commerce site.

Global Brands has a large portfolio of labels that includes Jones New York and Juicy Couture. In April, Global Brands sold a majority stake in The Frye Company brand, known for its Frye cowboy boots, to brand licensor Authentic Brands for $100 million.

Liquidators Hilco Global and Gordon Brothers are also members of the bidding consortium. “This is the best possible outcome for customers, vendors, business partners and our employees who are the lifeblood of the company. BCBG will remain a viable, creative and strong brand going forward across multiple platforms,” said Marty Staff, acting interim chief executive officer for BCBG Max Azria.

Marquee and its group are considered the “stalking horse” bidders and still can be outbid by other interested companies. BCBG Max Azria has agreed to pay Marquee a $3.18 million break-up fee as well as $345,000 in expense reimbursements if the Marquee bid is topped by another entity.

BCBG Max Azria, noting it has been in negotiations with several potential buyers since May 19, has requested that the deadline to counter the Marquee consortium bid be moved to June 20. A hearing on the motion to sell to the Marquee consortium is scheduled for June 23 in bankruptcy court. A final approval to confirm the reorganization plan is expected to be made by the court no later than July 31.

BCBG Max Azria filed for bankruptcy protection on Feb. 28, with a debt load of more than $485 million. It is owned by investment firm Guggenheim Partners and affiliates, who hold most of the company’s equity. BCBG Max Azria was once a high-flying company that showed its fashions during New York fashion week and was worn by celebrities such as Drew Barrymore, Selena Gomez and Kim Kardashian. But carrying a heavy debt load was its undoing.

Since filing for bankruptcy protection, BCBG Max Azria closed 120 unprofitable U.S. stores, which racked up $10 million in losses during fiscal 2016. The company’s 276 stores within stores continue to operate, and 71 BCBG locations remain open.

Last year, Max Azria, who founded the contemporary label in 1989, was pushed aside as chief executive of the company and replaced by Marty Staff. Since then, Azria has gone on to another industry and was named chief executive of ZappLight, a company he invested in that makes LED light bulbs that zaps bugs and kills them.

Earlier this year, Lubov Azria, who is married to Max Azria, was fired as BCBG’s chief creative director. The Azrias then filed a labor contract lawsuit against their former employer, maintaining that Lubov was illegally dismissed and should have received a $7 million golden-parachute payout.

Lubov Azria’s contract included an annual $2.15 million base salary, an $80,000-a-year wardrobe allowance, $3,000 a month for an automobile lease and an annual driver allowance of $50,000. The lawsuit was dismissed by a U.S. bankruptcy judge.