True Religion Apparel second amended plan takes effect as of Oct. 27

By Caroline Salls

Pittsburgh, Oct. 27 – True Religion Apparel, Inc.’s second amended plan of reorganization took effect on Friday, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on Oct. 5.

Through the reorganization, the company has cut its term loan debt to $113.5 million from $471 million and extended the maturities to 2022, according to a news release.

“With substantial debt burden removed, we are eager to turn our full attention to implementing our forward-thinking strategy, including improving our retail operations, new partnerships and growing the brand’s digital presence,” said chief executive officer John Ermatinger in the news release.

Adjusted EBITDA through September was $13.6 million, an increase of 46% from a year earlier.

As part of the reorganization, the company obtained a $60 million exit ABL facility from Citizens Bank, which provided an equal amount of DIP financing.

As previously reported, the company reached a restructuring support agreement with the substantial majority of its term loan lenders and sponsor TowerBrook Capital Partners.

Under the plan, first-lien claims will be converted into new equity and new first-lien term loans.

The plan provides for full payment of claims of True Religion’s continuing trade creditors, which includes continuing vendors, suppliers and landlords.

Priority claims will be paid in full in cash.

Continuing operations claims will be paid in full in cash or reinstated.

Holders of general unsecured claims will receive a share of reorganized first-lien term loans, 6% of the maximum number of exchange common shares and class A warrants.

In addition, if general unsecured creditors voted as a class to approve the plan, they will receive $1 million in cash, additional first-lien term loans or warrants for swapped debt and an equity cash out option that gives them a share of $1.05 million if they elect to receive cash in lieu of exchange common shares.

If the class voted to accept the plan, holders of equity interests in the holding company will receive a share of exchange common shares, class B warrants and class C warrants. If this class voted to reject the plan, the interest holders will receive nothing, their share of the exchange common shares will go to the first-lien lenders, and the class B and class C warrants will not be issued.

True Religion, a Vernon, Calif.-based jeans and jeans-related sportswear company, filed bankruptcy on July 5. The Chapter 11 case number is 17-11460.

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