Former Ascena Retail Chapter 11 plan effective as of Friday

By Sarah Lizee

Olympia, Wash., March 8 – Mahwah Bergen Retail Group, Inc., formerly Ascena Retail Group, Inc., gave notice that its Chapter 11 plan took effect on Friday, according to a filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.

The company’s Chapter 11 plan was confirmed on Feb. 25, as previously reported.

In December, Ascena completed the sale of its Ann Taylor, LOFT, Lou & Grey and Lane Bryant brands to Premium Apparel LLC, an affiliate of Sycamore Partners, for a purchase price of $540 million. Ascena also sold its Tween Brands, Inc. Justice business to Bluestar Alliance LLC for about $90 million, and its Catherines assets to FullBeauty Brands Operations, LLC for $40.8 million.

A plan administrator will wind down and dissolve the debtors’ estates following the effective date.

Under the plan, administrative claims, DIP ABL facility claims, DIP term facility claims and priority tax claims will be paid in full.

Holders of other secured claims will receive payment in full in cash, delivery of the collateral securing their claims or have their claims reinstated.

Holders of other priority claims will be paid in full in cash.

Holders of ABL claims will either receive payment in full in cash and replacement or cash collateralization of all issued and undrawn letters of credit under the ABL credit agreement, or receive the collateral securing their claims.

Holders of term loan claims will receive their pro rata share of the net lender distributable cash from the sale. Had the sale not closed by the effective date, holders of term loan claims would have received their pro rata share of the loans under a second-out exit term loan facility, 55.1% of new common stock less the percentage of new common stock distributed as an equity premium, subject to dilution on account of the management incentive plan, and excess cash.

Holders of general unsecured claims will receive their pro rata share of the GUC trust net assets, which is equal to $7.25 million and 100% of the first $1 million and 50% of the next $4 million of proceeds received by Ascena resulting from a payment card interchange fee and merchant discount antitrust litigation.

Holders of intercompany claims, intercompany interests and interests in Ascena will receive no distribution.

Ascena is a Mahwah, N.J.-based specialty retailer offering clothing, shoes and accessories for misses and plus-size women. The company made a pre-packaged Chapter 11 bankruptcy filing on July 23, 2020 under case number 20-33113.

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