Urban Brands files Chapter 11 bankruptcy to complete asset sale

By Caroline Salls

Pittsburgh, Sept. 21 - Urban Brands, Inc. filed Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the District of Delaware to complete a sale of its assets.

Despite the strength of their brands and success at individual store locations, the Ashley Stewart brand parent said it began suffering from cash flow and liquidity problems in 2007. These problems continued in 2008 with the slowdown in the overall economy.

Urban Brands said it sold its Marianne division stores to alleviate the problem, but it continued to operate at a loss.

According to court documents, Urban Brands has $50 million to $100 million in assets and $100 million to $500 million in debt.

Urban Brands has negotiated an asset purchase agreement with stalking horse bidder New Ashley Stewart, LLC in connection with the proposed sale of substantially all of its assets. New Ashley Stewart is an affiliate of GB Merchant Partners, LLC.

In connection with the bankruptcy filing, the company has requested court approval to obtain up to $6 million in debtor-in-possession financing from Bank of America, NA.

Interest will be Prime rate plus 700 basis points, and the facility will mature on the earliest of Oct. 29, occurrence of an event of default, approval of a sale of substantially all company assets and the effective date of a plan of reorganization.

The company's largest unsecured creditor is Angel Made in Heaven, Inc. of New York, with a $1.21 million trade claim. Urban Brands did not list any other unsecured creditors with claims of $1 million or more.

The company's largest equity holder is Trimaran Fund II, LLC.

Urban Brands is represented by Richards, Layton & Finger, PA.

Urban Brands is a Secaucus, N.J.-based plus-sized apparel retailer. Its Chapter 11 case number is 10-13005.

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