BCBG Max Azria may be the next retailer to file for Chapter 11 bankruptcy

Following the news of many retailers who have fallen to the competitive retail world, it seems that BCBG Max Azria is next in line. The company recently has already made plans to shutter a massive number of its operating stores.

The luxury fashion house has informed mall owners that it plans to close most of its existing stores this year, as reported by Reuters. Currently, BCBG Max Azria Group LLC has approximately 200 locations in the U.S. Worldwide, the company has approximately over 550 boutiques in cities such as Tokyo, Paris, London, Santiago, Hong Kong and more. The brand also retails at department stores including Macy's Nordstrom, Saks Fifth Avenue, Lord & Taylor, and more.

According to Reuters, the retailer is working with its financial advisers to prepare the bankruptcy filing. If this company follows the route of other retailers who have filed recently, it’s likely that BCBG will sell its assets and intellectual property in hopes of finding a buyer. The company’s debt load is approximately 485 million dollars, which BCBG is working on fixing at the moment. The company is also behind on its rent currently, which points to more internal financial struggles. Reuters reports that the company could file for Chapter 11 bankruptcy as soon as next week.

The recent years for the company have been the most crucial for this turnaround. The company received approximately 135 million dollars from its investors including affiliates of Guggenheim two years ago. The cash was a solution to restructuring the company's debt at the time. However, it seems that BCBG has not done will in terms of sales in the last year or so, which has hurt the company. According to Business of Fashion, the company's store business has declined by over 20 percent since 2015. Retail currently accounts for 71 percent of the fashion house's revenue, and as in-person shopping has declined it is not a surprise that its stores have suffered.

While the company may be headed towards bankruptcy, BCBG could still set a plan in motion for restructuring in order to turn things around. Usually in months leading up to bankruptcy, retailers can attempt to allocate their business and try to fix their financial struggles. American Apparel dealt with multiple restructuring plans that sustained the company for a couple more months, however unfortunately the business fell flat. If BCBG acts fast and creates an effective plan, it could turn things around.

BCBG Max Azria to shutter most of its locations

BCBG isn’t the only retailer who has struggled with debt. Other clothing lines that have filed for Chapter 11 bankruptcy recently include Nasty Gal, The Limited, and Wet Seal. Due to declining mall traffic and the increase in online shopping, there are various factors as to why these retail giants have fallen. While BCBG hasn’t publicly commented on its bankruptcy status, if the company moves forward with these plans it is likely that mass layoffs and store closures are close to follow.

Photo: BCBG Max Azria