True Religion out of Bankruptcy | Half Price Lawyers

True Religion Out of Bankruptcy and Hopeful for the Future

Less than four months after filing for Chapter 11 Bankruptcy, the clothing chain True Religion has exited bankruptcy.

A Solid Bankruptcy Reorganization Plan

The retailer’s reorganization plan, approved in early October, called for a reduction in its loan terms from $471 million to $113 million. As well, the plan called for an extension of its debt maturities to 2022.

The company’s CEO, John Ermatinger, said in a statement that these terms would “substantially” reduce the company’s debt servicing obligations and clear the way “for continued investment and company growth.”

Additional Efforts May Provide Extra Relief

He also stated the company looks forward to “improving…retail operations, new partnerships and growing the brand’s digital presence.”

In case you didn’t do the math: by filing Chapter 11 Bankruptcy, True Religion managed to shed $358 million in debt.

Success Isn’t Guaranteed

Other stores that recently filed for Chapter 11 and emerged with a much lighter debt-load include Payless, Gymboree, and rue21. Each restructured company must contend in a retail environment they struggled to contend in before. Certainly, the unburdening of a substantial portion of each company’s debt will help moving forward, but that doesn’t guarantee success in the long run.

Businesses Must Fix Problems For Bankruptcy to Be Successful

According to Deb Rieger-Paganis, managing director at the consulting firm AlixPartners, it is imperative that re-organized retailers emerging from Chapter 11 “fix the business problems.” Aside from closing stores, retailers must often reduce corporate staffs to get the “overhead structure aligned with strategy, get the right people in the right places,” Rieger-Pagani shared.

Only time will tell if True Religion can thrive in the current marketplace.