Global Brands Group has placed its US subsidiary GBG USA into Chapter 11 bankruptcy protection as it tries to sell brands to repay debt.
But the company’s CEO Rick Darling says despite problems facing the group’s US and European operations, its brand management business is “robust and profitable”.
Top of the list of US divestments is the Aquatalia brand, along with Ely & Walker, Airband, MagnaReady, Yarrow, B New York and Juniperunltd.
The Hong Kong company’s Global Brand Management and European businesses are unaffected by the US Chapter 11 process, however the company admitted in June that there was a question mark over its ability to continue to trade as a going concern.
That admission followed the sale of its Spyder business to a Korean investor in April netting US$19.5 million. Chairman William Fung said in June that the company’s liabilities exceeded its assets by US$899 million at the end of September last year.
In a statement issued, Global Brands Group said it had entered into an asset purchase agreement (APA) with WH AQ Holdings (as purchaser) and Hilco Brands (as guarantor), in which both will serve as the “stalking horse bidder in a court-supervised sale process for GBG USA’s Aquatalia brand and business”. That APA provides a purchase price of $17.3 million, however the agreement allows for a higher bid or offers the company might consider a better offer.
“Over the past 18 months, the retail landscape has been greatly impacted by Covid-19, creating hardships for us and many others across our industry,” CEO Rick Darling said in the statement.
“Our business has also been impacted by ongoing structural shifts in the retail industry, as well as persistent geopolitical tensions that have disrupted supply chains. These factors have been especially detrimental to GBG USA.”
Darling said the company had taken significant steps over the past year to strengthen GBG USA’s financial position while reviewing all strategic options for GBG USA and its brands.
“This process resulted in the successful sales of our South Korean Spyder retail operation, the inventory and related assets for two of our brands, Spyder and Frye, and an APA for our Aquatalia brand and business. As for GBG USA’s remaining assets, we determined that a court-supervised process to facilitate a sale is the best course of action to maximise value for all stakeholders and address the financial position of GBG USA and the group in a fair and transparent manner.”
Darling said the company’s brand management business remains “robust and profitable”.
“I am extremely grateful to our employees across the globe who have demonstrated agility and dedication while continuing to serve our customers and supply chain partners in this period of uncertainty.”