A closely watched comeback has suddenly sputtered out—for now.
On Monday, denim label True Religion Apparel Inc. filed for Chapter 11 bankruptcy court protection, the latest victim of a liquidity crisis brought on by stores forced to close beneath the staggering weight of the coronavirus pandemic.
The petition lodged Monday in a Delaware bankruptcy court marks the Southern California brand’s second Chapter 11 filing in just three years. After filing in 2017, True Religion exited bankruptcy proceedings under new ownership following a four-month tour of duty that saw it shedding more than $350 million in debt. New York- and London-based private equity firm TowerBrook Capital Partners acquired the designer jeans brand loved by Bella Hadid for $824 million in 2013.
Although its stores are closed indefinitely, True Religion’s e-commerce site remains in operation and the company has been able to obtain financing from lenders, according to CEO Michael Buckley.
“We also look forward to using the Chapter 11 reorganization process to help us with our business relationships in what we hope is a short stay in Chapter 11,” Buckley said in a statement to the Associated Press.
The premium denim brand has struggled in recent years in the face of the growing movement toward athleisure, even shifting gears to include its own version of the casual comfort trend. But now, True Religion is offering up to 70 percent off all merchandise for men’s, women’s and kids on its e-commerce site, where men’s and women’s jeans are priced upwards of $100 a pair, most around the $149 and $189 price point. New arrivals, such as a seamed jogger pant, tie-dye legging, graphic tees and a women’s denim Fey jumpsuit, are all selling for 40 percent off original prices.
True Religion has been a part of the Los Angeles denim scene since its founding in 2002 by Jeff Lubbell. Its claim to fame was blowing up the construction of the classic five-pocket jean with a process using a five-needle thread in a two-stitch-per-inch process dubbed the True Religion Super T stitch.
The brand’s current struggles hint at what may be in store for other retailers and fashion brands facing liquidity challenges as non-essential stores remain closed for the duration of the coronavirus outbreak. Neiman Marcus is said to be exploring options to restructure its debt load and isn’t ruling out a possible bankruptcy filing, depending on how those talks go. And department store retailer Stage Stores is said to be in dialogue with vendors to try to negotiate new terms on existing orders.
Both retailers, like True Religion, have furloughed most of their store associates. Stage also has furloughed its field support, distribution center associates and about 90 percent of employees at its Houston support center.