John Varvatos Files Chapter 11 Bankruptcy...
Very sad to see this. I interviewed at Varvatos years back for a senior management position. I made it to the last round of 2. The person they picked I have the utmost respect for. Great company....
John Varvatos Enterprises, Inc. ("John Varvatos Enterprises" or "the company"), the owner of the globally recognized luxury menswear brands John Varvatos Collection and John Varvatos Star USA, today announced it has reached agreements with an affiliate of Lion Capital LLP ("Lion"), an existing investor, under which the company will sell its business to Lion as a going concern in order to ensure the business’s long-term success. To facilitate this transaction, John Varvatos Enterprises and certain of its affiliates have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.
"The agreements with Lion represent a critical step in our process to transform our business to drive long-term, sustainable growth," the company’s founder, John Varvatos, said. "We have taken decisive action to respond to the challenges that all retailers face in the present environment and we remain extremely confident that our brand, celebrating its 20th year in business, will emerge even stronger. We have a passionate team, a fierce global consumer following and a commitment to our customers, whom we expect to serve for many years to come."
The sale to Lion will be subject to approval of the bankruptcy court and may include a court-supervised auction in which other bidders may offer a higher price for the company’s assets. Lion remains confident in the long-term potential of the company’s business to be operated as a going concern in the future and has additionally committed to provide, subject to court approval, debtor-in-possession ("DIP") financing, which, when combined with the company’s projected cash flows, is expected to support its operations during the restructuring process.
The company has filed a series of customary "first day" motions with the bankruptcy court, seeking to maintain its operations during the restructuring process to help facilitate a smooth transition into Chapter 11.
Along with the rest of the luxury retail industry, John Varvatos Enterprises has been greatly impacted by the negative effects of the coronavirus pandemic. In the months immediately preceding the pandemic, John Varvatos Enterprises established a talented new executive leadership team. In response to the rapid and exponential spread of COVID-19 as well as relevant governmental orders, the company’s leadership took difficult yet prudent steps to temporarily close all store locations and conserve cash. The restructuring and related agreements represent the effort to continue the company’s legacy and to reposition the reorganized entity for long-term success.
John Varvatos Enterprises has retained MMG Advisors as investment banker, Morris, Nichols, Arsht & Tunnel as legal counsel, and the Clear Thinking Group, LLC, as restructuring advisor. Sullivan & Cromwell will serve as legal counsel to Lion, the proposed purchaser of the assets.
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