Licensee company Centric Brands has filed for bankruptcy. The company is best known for making goods for major brands including Tommy Hilfiger, Under Armour, and Calvin Klein. Centric has secured 435 million dollars in debtor in possession financing from Blackstone, Ares Management, and HPS investment partners. The lenders will be taking control over the company.

“The agreement contemplates a timely emergence from the process with a plan to substantially reduce the company’s funded second lien indebtedness by approximately 700 million dollars, thereby positioning the business for future growth and success,” Centric said in a statement.

“Today’s agreement marks the beginning of our next chapter as an even stronger company and builds upon our progress to date executing on our long-term strategy,” said Jason Rabin, chief executive officer of Centric Brands, in a statement. “The current crisis has significantly impacted companies across all sectors. The pandemic disrupted many of our wholesale accounts’ ordering and constrained our cash flow. However, we are confident that with added flexibility in our capital structure, we will be well-positioned for long-term success during this period and beyond. We thoroughly evaluated all possible strategic options to address this environment. After extensive review, we determined that partnering with our current lenders to pursue this path will result in a stronger financial position and more resources to support future growth, while allowing us to focus on serving key stakeholders.”

Centric is one of the biggest power players in the licensee business, but like virtually all fashion companies they felt the brunt of the economic fallout from coronavirus. While Centric could be floundering for a while as stores cancel orders and brands shrink the amount of product produced, in the long-term they are well equipped for survival given their length list of licensee agreements. Recently Centric was in a good enough place to be in the business of acquisition. In February, the company acquired Zac Posen's namesake label.

Although Centric Brands is under the control of its lenders, everything else will be business as usual as best as possible. As stores begin to reopen across the globe, apparel and manufacturing companies are thinking about long-term strategy with the global economy thrown into a recession. With the recession expected to last up to 18 months, companies will have to hunker down and adjust their current business strategies.

Keep up-to-date on news in the fast-moving fashion world by subscribing to our newsletter! Click here >>

 

RELATED NEWS

MORE NEWS

 

Latest jobs

 

MOST READ