US based jeans maker True Religion Apparel Inc has filed for bankruptcy reorganisation and has also signed Restructuring Support Agreements (RSA) with the substantial majority of its Term Loan Lenders and its Sponsor. The company has filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware.
True Religion expects it will take 90 to 120 days to obtain confirmation of its pre-arranged plan by the Bankruptcy Court. The RSA with lenders like Tower Brook Capital Partners will reduce the company’s debt by over $350 million and convert it into the substantial majority of its reorganised equity.
True Religion has secured post-petition debtor-in-possession (DIP) financing from Citizens Bank N.A. for up to $60m. Once True Religion’s plan is confirmed and it achieves the desired deleveraging of its balance sheet under the plan, True Religion will have sufficient ‘exit’ funding, also provided by Citizens Bank N.A., in addition to its ongoing cash flow, to finance operations post confirmation.
The plan provides for full payment of claims of True Religion’s continuing trade creditors, which includes continuing vendors, suppliers and landlords. True Religion has taken additional steps to ensure a smooth and orderly transition through the Chapter 11 filing. The company has filed a motion to honour and pay prepetition purchase orders that were issued prior to the petition date, but which have not yet come due. True Religion has also filed a separate motion to pay certain vendor claims that arose prior to the Petition Date, as well as to pay for goods received within 20 days of the bankruptcy filing.
The company’s legal advisors include Wachtell Lipton Rosen & Katz and Pachulski Stang Ziehl & Jones. The company’s financial advisor is MAEVA Group, LLC.