Ascena Retail Group is planning to declare bankruptcy besides closing at least 1,200 stores permanently.
As early as next week, thea group could be looking at filing for protection under Chapter 11, in an attempt to unload US $ 700 million of a total US $ 1.1 billion in debt.
Out of a total fleet of around 3,000 stores, the company can choose to keep some running while it prepares to either shut or sell some of its brands during the bankruptcy proceedings.
While the pandemic is largely to be blamed, Ascena had been battling lower sales as shoppers turned to e-commerce and footfall in malls dropped.
During the lockdown, the company had cut base salaries, furloughed employees and stopped paying rent while senior staff members took as much as 50 per cent pay cuts. However, this effort to preserve liquidity could not save their tanking finances.
The company has hired restructuring lawyers at Kirkland & Ellis and investment bank Guggenheim Securities for advice to tide over this time. Eaton Vance Corp will presumably take control of the company.