Premium denim is officially dead.
Private equity-backed True Religion Apparel Inc. announced Wednesday that it has filed for Chapter 11 bankruptcy with plans to restructure its debt.
True Religion said that the bulk of its lenders and its private equity sponsor, TowerBrook Capital Partners, had agreed to a restructuring that will cut the company's debt by $350 million.
"After a careful review, we are taking an important step to reduce our debt, reinvigorate True Religion's iconic brand and position the company for future growth and success," CEO John Ermatinger said in a statement. "By dramatically improving our capital structure 24 months in advance of our term loan maturity, we will continue business operations as usual and provide our employees and business partners the long-term stability they need, while providing the necessary flexibility to invest in growing our digital footprint, building connections with customers, and improving organizational competencies."
Trade creditors, including vendors, suppliers and landlords, will be paid in full, True Religion said, and business is expected to continue through the Chapter 11 process.
For the twelve-month period ending in May, True Religion's Ebitda (earnings before interest, taxes, depreciation and amortization) rose 95% to $7.1 million, Ermatinger added. But, Moody's analyst Raya Sokolyanska estimated in a January report that Ebitda fell 62.5% during the year ending in October and was less than a third of its 2012 Ebitda.
TowerBrook took True Religion private for $835 million in 2013, when its Ebitda was $93 million.
The Los Angeles-based company is expected to obtain confirmation of its bankruptcy plan within 90 to 120 days.
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