Popular designer jeans brand True Religion Apparel Inc., has filed for Chapter 11 bankruptcy in Delaware. This is the company’s second declaration since 2017.
In its previous filing, the company had emerged 4 months later with plans to gain traction by adopting the nostalgic, throwback vibe. But this filing comes as the COVID-19 lockdown has affected the business adversely due to closure of all bricks-and-mortar stores.
The liquidity constraints that True Religion was already facing have been exacerbated by the whole situation. However, the company will continue to run its e-commerce business.
According to court documents submitted by the company, they believe this bankruptcy filing is the only option to stay in business once the lockdown is lifted and the only way to maximise value for shareholders.
The retailer had previously furloughed all non-essential employees in order to conserve liquidity. “While the debtors would have preferred to wait-out the current instabilities of the financial markets and retail industry generally, they simply could not afford to do so,” said the statement.
True Religion had hired its former president Michael Buckley as top executive in November last year.
There are many retailers who may not have the option of filing to reorganise in bankruptcy courts and will just end up liquidating. Other rivals such as Diesel and 7 for all Mankind have had their fair share of financial woes during these unprecedented circumstances.
Although True Religion had emerged from its first bankruptcy in only 4 months, the current situation may demand longer time for many retailers to return to normalcy, according to industry experts.