Consortium reportedly preparing 'stalking horse' bid for BCBG Max Azria

Dive Brief:

Brand license company Marquee Brands LLC is leading a consortium to bid on BCBG Max Azria Group LLC at the struggling fashion retailer’s bankruptcy auction, unnamed sources have told Business of Fashion.
The move — which includes a partnership forged among Marquee, Global Brands Group Holding Limited (a company spun off from exporter Li & Fung Ltd. that already has a licensing agreement with many BCBG brands), licensing company Gordon Brothers and liquidator Hilco Global — will provide a bid for other interested parties to top (a so-called "stalking horse") and could salvage some 15 to 20 stores, according to the report.
BCBG Max Azria in March filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court Southern District of New York and an auction will be held later this month. Bids for BCBG should start at $150 million, according to one source.

Dive Insight:

BCBG Max Azria has received commitment for $45 million in new financing to fund restructuring efforts, which include a focus on digital, e-commerce and wholesale, and licensing agreements. In March the company said it expects to complete a reorganization within six months and will keep stores open in the process. But earlier this month, it announced the closure of 120 stores, mostly in the U.S., as well as its freestanding stores in Canada. The company said it will consolidate operations in Europe and Japan.

The bid plan reported by Business of Fashion could help keep at least a meager fleet of stores open, but the company will likely see most of its brands licensed by other companies that see enduring value in them.

Founded in 1989 by Tunisian fashion designer Max Azria (who was also its CEO until last year and recently joined bug-zapping startup ZappLight), BCBG Max Azria Group’s fashion fans once counted the likes of Angelina Jolie, Rachel Bilson, Eva Mendes, Kate Winslet, Victoria Beckham, Alicia Keys and Catherine Zeta-Jones. Azria based his vision and his company name on “bon chic, bon genre," Parisian slang for "good style, good attitude." But the rise of e-commerce and changing consumer expectations, including new pressures to speed up the supply chain to slake the thirst for “see now, buy now” releases, have taken a toll.

The company said it has received commitments from existing asset-based and term loan lenders to provide financing as it regroups; BCBG listed assets of between $100 million and $500 million and liabilities between $500 million and $1 billion, according to the court filing. The company is being advised by AlixPartners LLP and Jefferies LLC as its restructuring advisors, and by Kirkland & Ellis LLP as its legal advisor.

One question is whether lenders will have the patience to see the retailer’s turnaround through. Others have not been so lucky. BCBG is just the latest in a series of retailers entering Chapter 11 protection and shuttering stores in recent months, and many — like The Limited Stores, Wet Seal and American Apparel — have buckled under the debt loads of their financial sponsors. Business of Fashion's report suggests that, rather than a turnaround per se, the retailer's brand equity is likely to be divvied up among the bidding group's participants.