Court clears way for Brooks Brothers Canada to be sold to new owner of Forever 21 and Lucky Jeans
An Ontario Superior Court judge has granted an order adding Brooks Brothers Canada Ltd. to its parent company's U.S. bankruptcy proceedings, paving the way for the sale of the luxury clothing retailer's Canadian assets.
The order, issued by Justice Glenn Hainey under the cross-border insolvencies section of the Companies' Creditors Arrangement Act, allows Brooks Brothers Group Inc. to act as the Canadian retailer's foreign representative.
It also recognizes the U.S. Bankruptcy Court Chapter 11 restructuring process as the foreign main proceeding and grants a stay against debtors.
The court approval clears the sale of the 202-year-old clothier's Canadian assets — mainly inventory — to SPARC Group LLC, which purchased Brooks Brothers and its subsidiaries and affiliates for $325 million last month.
SPARC, which stands for Simon Properties Authentic Retail Concepts, is a joint venture between Authentic Brands Group and Simon Property Group.
Together, they've also scooped up American denim company Lucky Brand Jeans, as well as fast-fashion retailer Forever 21 in partnership with Brookfield Property Partners.
Brooks Brothers, the oldest apparel company in the United States, filed for bankruptcy in July.
Yet even before the pandemic, the retailer was struggling, according to the first report by professional services firm Alvarez & Marsal Canada Inc., named as the information officer for the Canadian proceedings in a supplemental court order.
The report said Brooks Brothers faced operational and manufacturing challenges due to shifting retail trends in recent years.
Despite efforts to rein in costs, improve efficiencies and increase brand loyalty, the report said Brooks Brothers also began exploring alternatives, including the potential sale of its assets.
However, the COVID-19 crisis brought on more severe liquidity and operational challenges, with its foreign vendors unable to operate and ship inventory.
By mid-March, Brooks Brothers had closed all its North American stores and New York headquarters.
The company, known for its tailored suits and iconic dress shirts, also reported poor online sales.