Houston — Citing struggles stemming from the rise of e-commerce, Charming Charlie has filed for Chapter 11 bankruptcy protection.
During the Chapter 11 process, which was filed late Monday, the Houston-based fashion retailer plans to restructure its debt while maintaining and operating a majority of its stores, as well as its online platform.
The company also plans to go through with its previously announced decision to shutter 97 of its underperforming stores.
Charming Charlie has secured commitments from its lenders for $20 million in new-money debtor-in-possession (DIP) financing. The company also entered into a $35 million DIP asset-backed loan with its lenders. Both financing arrangements are subject to court approval and are intended to help operation costs during the Chapter 11 process.
The Wall Street Journal reports the court on Wednesday approved the early use of the financing, and Charming Charlie is scheduled to return to court in January to request approval to use the balance of the loans.
The Chapter 11 bankruptcy filing is part of Charming Charlie’s restructuring support agreement (RSA) that the company entered into with most of its lenders and equity sponsors. The RSA provides a comprehensive financial and operational restructuring that will “significantly” reduce the company’s outstanding debt.
“We are confident that by reducing the size and scale of our business, we can focus on the core strengths that make the company successful,” says Lana Krauter, interim CEO of Charming Charlie.
Kirkland & Ellis LLP is serving as Charming Charlie’s legal counsel during the RSA process. AlixPartners LLP is serving as the company’s restructuring advisor, and Guggenheim Securities LLC is serving as its investment banker.
— John Nelson