U.S. womenswear chain A’Gaci to exit bankruptcy

Texas-based women’s fashion and accessories retailer A’Gaci is getting closer to saying farewell to bankruptcy. The womenswear chain went busted in January due to its struggles to repay a 62 million dollars debt pile.

Six months and a failed auction sale afterwards, A’Gaci is moving toward emerging from bankruptcy. As reported by local media, A’Gaci has just received bankruptcy court approval to enter into a commitment letter for up to 12 million dollars in financing from a Boston lender.

“It’s critical for the debtor to obtain exit financing in order to emerge from Chapter 11,” Ian Peck, an A’Gaci bankruptcy lawyer, said at a Tuesday court hearing before Chief U.S. Bankruptcy Judge Ronald King approved the request.

A’Gaci’s bankruptcy timeline: from hurricanes to failed inventory systems

The Texan fashion retailer started off 2018 on the wrong foot blaming its financial troubles on a failed expansion, hurricanes and the delayed implementation of an inventory management system.

A’Gaci filed for bankruptcy protection in January. Mark Butterbach, A'Gaci's chief financial officer, said in a court filing that it had about 82 million dollars in total assets and about 62 million dollars in total liabilities as of November, 25. Partners' capital was about 20 million dollars.

A'Gaci opened 21 stores over the last two years in Arizona, California, Florida, Nevada and Puerto Rico, Butterbach said. The rapid expansion "spread the organization too thin to effectively respond to the rapidly changing in the retail market," he said in the court filing. Additionally, the company recalled how its most profitable stores in Texas, Florida and Puerto Rico were ravaged by Hurricanes Harvey, Irma and Maria.

At the time of its bankruptcy filing, A’Gaci indicated it had identified 49 of its 76 stores for potential closure. Soon afterwards Peck said A’Gaci trimmed the list of closings to just 22 stores because of support from landlords and vendors.

But the fashion chain’s struggles didn’t stop there. In April A’Gaci had to cancel an auction of its assets, arguing that it received no qualified bids. “Despite an active marketing process and due diligence from several potential buyers… no acceptable buyer emerged,” Ian Peck, A’Gaci’s bankruptcy lawyer, said in an interview back then. “So the company decided to cancel the auction and not move forward with the sale process any further.”

Photo:A’Gaci web