Ashley Stewart, Urban Brands File for Bankruptcy

Designer Jill Scott at a personal appearance at Ashley Stewart, a popular plus-size retailer that has filed for Chapter 11.

Designer Jill Scott at a personal appearance at Ashley Stewart, a popular plus-size retailer that has filed for Chapter 11.

New York–Urban Brands Inc., the owner of 210 Ashley Stewart stores, known as the “retailer for the plus-size urban woman,” filed for Chapter 11 protection today, citing debt of $100 million to $500 million and assets of $10 million to $50 million.

The company, which is majority owned by New York asset management company Trimaran Capital Partners, markets to urban Hispanic and African American women. It owes about $81.3 million after entering a note purchase agreement with Trimaran Fund II LLC in 2004, and five additional debt agreements since then.

Last year, NPD Group reported that plus-size African American women ranked Ashley Stewart as their No. 3 favorite place to shop. Despite the strength of the Ashley Stewart brand, the company began suffering liquidity problems as economy worsened, according to papers filed in U.S. Bankruptcy Court for the District of Delaware, Wilmington.

Although Urban Brands improved on its 2008 net loss of $44.3 million in 2009, it still made a loss of $28.6 million, and sales fell to $174.6 million from $179.6 million.

Ashley Stewart Put on Sale, Continues Operations

Urban Brands said the best option available now is to preserve the business as a going concern and maximize the value of the company’s assets by pursuing a sale. The company said it had signed a non-binding letter of intent with New Ashley Stewart LLC for the sale of its assets.

Urban Brands said it expected New Ashley to execute the asset purchase agreement on or shortly after the bankruptcy petition date.

The company plans to continue operating and has entered an agreement with stalking horse bidder Gordon Brothers Merchant Partners, according to company spokesman David Brown. (A “stalking horse” sets a floor for bidding, against which all other offers will need to match or exceed.) Brown said he could not comment on the bid amount.

In the meantime, Urban Brands is continuing to solicit other bids, according to court documents.

UBI Holding Corp. owned 48% of the common stock of Urban Brands as of November 2009, according to court papers. Trimaran Fund II LLC, CIBC Employee Private Equity Fund and CIBC Capital Funding also held stakes.

The case is: In re: Urban Brands Inc. 10-13005. U.S. Bankruptcy Court for the District of Delaware (Wilmington).

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