Dive Brief:

• Brand collective Centric Brands on Tuesday said it filed under Chapter 11 at the U.S. Bankruptcy Court for the Southern District of New York in White Plains and entered into a restructuring support agreement with "substantially all" of its secured lenders, led by funds managed by Blackstone, Ares Management Corp. and HPS Investment Partners.

• Centric will emerge as a private company, with Blackstone exchanging second lien debt for equity interests, and senior lenders Ares and HPS retaining senior loan positions and receiving equity interests. The plan is to provide $435 million in debtor-in-possession financing and allow Centric "to operate without interruption throughout the restructuring process," according to a company press release. 

• Brand firm Marquee Brands said Tuesday that it will take back the BCBGMAXAZRIA and BCBGeneration licenses from Centric Brands following the bankruptcy filing. Marquee will continue operations of those wholesale and e-commerce businesses, according to a press release emailed to Retail Dive.

Dive Insight:

Considering the weak growth in apparel sales in recent years, Centric's brands were likely already experiencing some challenges. The COVID-19 pandemic has only made that worse, as consumers have less need than ever for clothes for work or special events, and are pulling back on spending with many stores still temporarily closed and economic uncertainty looming.

Apparel sales plunged 89% in April, with most retail stores closed due to the outbreak, after dropping more than 50% in March, when some stores were still open for part of the month.

Centric's own brands include Hudson, Robert Graham, Swims, Zac Posen and Avirex. The company also licenses more than 100 well known labels, including Calvin Klein, Tommy Hilfiger, Nautica, Hudson Jeans and Under Armour in apparel; Kate Spade, Michael Kors, All Saints and Jessica Simpson in accessories; and Disney, Marvel, Nickelodeon and Warner Brothers in entertainment. 

The company is also forced to grapple with the decline of department stores, another situation worsened by the pandemic. More than half of those retailers could close within two years, with the disease outbreak speeding up an existing trend, commercial property research firm Green Street Advisors said last month.

In a statement, Centric Brands CEO Jason Rabin said that the "pandemic disrupted many of our wholesale accounts' ordering and constrained our cash flow" but also that the agreement forged with the company's lenders ahead of its Chapter 11 filing positions it for long-term success.