Ascena Auctions Off Justice IP and Assets

The deal is another step in Ascena's restructuring through bankruptcy proceedings.

By David Moin on November 11, 2020 wwd

Ascena Retail Group Inc. has sold the intellectual property and certain other assets and liabilities of the Justice tween division to an entity formed by Bluestar Alliance LLC, a brand management company.

The purchase price was about $90 million.

The deal was made through “a comprehensive sale process and a competitive auction” conducted in bankruptcy court, Ascena said Wednesday morning.

Gary Muto, chief executive officer of Ascena, commented, “The conclusion of the sale process for our Justice brand is a significant step forward in our efforts to complete our restructuring process and maximize value for all our stakeholders.

“The optimization of our portfolio better positions Ascena for long-term success and supports our vision for the future. As we seamlessly transition ownership of Justice over the coming weeks, we remain committed to delivering meaningful experiences for our customers every day.”

Justice stores will remain open through the holiday season. A wind down of all Justice locations is expected to conclude by early 2021. The Justice web site will continue to operate through the holidays.

Justice Brand Holdings LLC, the entity formed by Bluestar Alliance for the Justice acquisition, outbid Premier Brands Justice, an acquisition vehicle for IHL, a men’s, women’s and children’s apparel manufacturing and wholesale company.

Bluestar, founded in 2006 by Joseph Gabbay and Ralph Gindi, owns, manages and markets a portfolio of consumer brands including Hurley, Bebe, Tahari, Brookstone, Kensie, Limited Too, Nanette Lepore, Catherine Malandrino and others. Bluestar’s retail footprint includes more than 250 stores, shops-in-shop, and distributors around the world.

Asked about plans ahead for Justice, Gindi replied, “We are currently formulating our plans and working on next steps. There is so much opportunity, and we’re very excited for the possibilities. Justice is an exciting brand. And we know and understand the Justice customer. We have had success in the kids and tween realm and understand what this consumer needs.”

Ascena filed for Chapter 11 bankruptcy last July after piling up debt through a string of acquisitions over the years. Ascena’s woes weave a tale of how management failed to execute on a vision to grow through aggressive acquisition and lead the mid-tier women’s specialty sector, which for years has been among the most troubled and competitive in retailing and has already closed at least 600 of Justice’s 800 locations. Ascena also operates Ann Taylor, Loft, Lou & Grey and Lane Bryant.

Ascena is making progress toward emerging from bankruptcy, having received bankruptcy court approval for its plan of reorganization, involving reducing debt by about $1 billion, from $1.3 billion, and debtor-in-possession financing, which includes a $400 million ABL facility and a $312 million term loan, which includes $150 million in new money, which converts to exit financing upon the company’s emergence from the Chapter 11 process.

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