FullBeauty Brands Finalizes Plan for a Pre-Packaged Bankruptcy
The plus-size apparel firm plans to file by Jan. 24.
Plus-size apparel firm FullBeauty Brands Inc. could be the first fashion firm to file for bankruptcy court protection in 2019 when it files its planned Chapter 11 petition later this month.
The company said Thursday that it has reached an agreement with key stakeholders, including equity sponsors Apax Partners and Charlesbank Capital Partners and holders of first and second lien claims. The plan calls for reducing its $1.2 billion debt load by $900 million and then handing over control of the company to its senior lenders.
A statement issued by the company said the agreement will reduce indebtedness, significantly strengthen the balance sheet and enhance its financial flexibility going forward.
The company said it plans to file a voluntary Chapter 11 petition with a Manhattan bankruptcy court by Jan. 24. Furthermore, it also has negotiated agreements with existing lenders for $30 million of additional liquidity in a new term loan so it can pay vendors and service providers during and after the bankruptcy process. Given that the plan is for a pre-packaged bankruptcy, FullBeauty probably would be able to exit Chapter 11 after a short-tour of bankruptcy court proceedings.
The company was a likely candidate for a bankruptcy filing after missing an interest payment in November on a $345 million loan.
Emilie Arel, chief executive officer, said, “We are fortunate that FullBeauty has highly relevant brands and a dedicated customer base and I am confident that the outcome of this process will be a more sustainable and stronger company for our customers, employees, vendors and business partners.”
FullBeauty owns the brands Roaman’s, Jessica London, Woman Within, King Size and Brylane Home, among others. It operates as a direct-to-consumer e-tailer, with catalogue operations. But in the age of inclusivity, FullBeauty faces competition from many firms looking to enter what has historically been the largely underserved plus-size market. They include Amazon and Walmart, which last year inked a deal to acquire the plus-size line Eloquii. Companies such as ModCloth, also owned by Walmart, have been making a bigger push into the plus-size category. Other competitors include relatively new start-ups Dia&Co. and Universal Standard. Plus-size apparel typically refers to size 14 and up.