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Lucky Brand Dungarees, LLC Enters Into Asset Purchase Agreements And Files Voluntary Chapter 11 Petitions To Optimize Operations And Pursue A Sale Of The Company

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LOS ANGELES — July 3, 2020 — Lucky Brand Dungarees, LLC (“Lucky Brand” or the “Company”), the Los Angeles based designer and retailer of iconic American denim and apparel announced today that it has entered into a stalking horse asset purchase agreement with SPARC Group LLC (“SPARC”), a global operator of lifestyle brands including Aéropostale and Nautica, for the sale of substantially all of the Company’s operating assets. In connection with the transaction, ABG-Lucky LLC, a newly formed subsidiary of Authentic Brands Group LLC, a brand development, marketing, and entertainment company, which owns a global portfolio of entertainment, media, and lifestyle brands will acquire all the intellectual property assets of Lucky Brand. In addition to entering into the asset purchase agreement with SPARC, the Company and certain of its affiliates also entered into a “back-up” asset purchase agreement for the sale of the Company’s and such affiliates’ intellectual property and certain other assets to ABG-Lucky LLC which will only come into effect if the asset purchase agreement with SPARC terminates under certain circumstances.

To facilitate the sale and reduce its debt burden caused by recent challenges, including the COVID-19 pandemic, Lucky Brand has initiated proceedings under Chapter 11 of the U.S. Bankruptcy Code in the District of Delaware. Lucky Brand has received new financing commitments from certain of its existing lenders that will provide sufficient liquidity to fund the business through the closing of the sale.

Lucky Brand will be operating its business in the ordinary course during the Chapter 11 process, and the vast majority of its stores, e-commerce platform, and wholesale business remain open to serve customers. During Chapter 11, Lucky Brand and its advisors will continue to explore potential sale transactions with other parties to achieve the highest or otherwise best offer for the Company.

Matthew A. Kaness, appointed as Interim CEO in September 2019 and also Executive Chairman in January 2020, said, “The COVID-19 pandemic has severely impacted sales across all channels. While we are optimistic about the reopening of stores and our customers’ return, the business has yet to recover fully. We have made many difficult decisions to preserve the Company’s viability during these unprecedented times. After considering all options, the Board has determined that a Chapter 11 filing is the best course of action to optimize the operations and secure the brand’s long-term success. We remain committed to our Associates, vendors, and business partners and appreciate the continued support through this process.”

Lucky Brand has filed a number of customary motions with the U.S. Bankruptcy Court seeking authorization to support its operations during the process, including the authority to continue payment of employee wages and maintain healthcare benefits.

Posted July 6, 2020

Source: Lucky Brand Dungarees, LLC

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