Sequential Brands Group, Inc.

THE DEBTORS OWN ACTIVE AND LIFESTYLE BRANDS

The Debtors in this case are:

• Sequential Brands Group, Inc.
• SQBG, Inc.
• Sequential Licensing, Inc.
• William Rast Licensing, LLC
• Heeling Sports Limited
• Brand Matter, LLC
• SBG FM, LLC
• SBG Universe Brands, LLC
• Galaxy Brands LLC
• The Basketball Marketing Company, Inc.
• American Sporting Goods Corporation
• LNT Brands LLC
• Joe’s Holdings LLC
• Gaiam Brand Holdco, LLC
• Gaiam Americas, Inc.
• SBG-Gaiam Holdings, LLC
• GBT Promotions LLC

Sequential Brands owns partial or full interests in various different activewear and lifestyle brands. Some of the brands that are owned by the Debtors fully or by majority interest are: William Rast, Joe’s, Jessica Simpson Collection, SPRI, GAIAM, Avia, and AND1.

VALUABLE BRANDS WITH TOO MUCH LEVERAGE

At the first hearing in the Sequential Brands bankruptcy case on September 1, 2021, the lawyer for the Debtors set out this headline: The Debtors are Valuable Brands, but Too Much Leverage. Through the bankruptcy case, the Debtors are planning to sell off their brand rights and all other assets. They have the support of some of their lenders for this plan.

As of the bankruptcy filing, the Debtors owed at least $426 million in secured debt. They estimate at the same time that they owe only $1.2-$1.4 million in unsecured debt. The Debtors state that these debts are in excess of the value of all of the assets of the company.

Recognizing that its debt load was unsustainable, the Debtors began looking for a way to sell some or all assets in 2019. They worked with a team of professionals to develop a pitch to market their assets through early 2020. Just when the pitch was ready to go to market in March 2020, the COVID-19 pandemic began to hit with force in the United States. Due to this unfortunate timing, Sequential Brands was unable to sell its assets for value throughout 2020 and early 2021.

Sequential Brands has been working with its lenders through a series of defaults, waivers, and forbearance agreements in 2020 and 2021. These efforts have led to the bankruptcy filing and proposed sales through bankruptcy that the Debtors hope to execute in this case.

ASSET SALES ARE SET TO CLOSE WITHIN WEEKS

In their initial papers and at the first day hearing, Sequential Brands disclosed their intention to market their assets for sale. However, in order to do so with the support of their lenders, the Debtors have agreed to have a quick sale process, with asset sales to close within 75 days of the filing date. That is, the Debtors hope to sell millions of dollars in assets by mid-November. The case will likely be mostly completed by the end of 2021.

To help with this process, the Debtors closed on a number of smaller sales in the months leading up to bankruptcy, including sales for $2 million, $11 million, and $20 million. The proceeds of these sales mostly went to pay down the Debtors’ secured debt.

Additionally, the Debtors have received offers to buy larger chunks of assets through the bankruptcy case. In particular, the Debtors have disclosed: (1) an offer to buy their activewear brands for around $333 million; (2) an offer to buy their Joe’s Jeans brand for around $42 million, with some to be paid over time; and (3) an offer from Jessica Simpson’s family to buy the Debtors’ interest in the Jessica Simpson Collection back for around $65 million. This third offer is non-binding but the Debtors had enough confidence to disclose it at the first day hearing and hope that it will become binding.

These offers may not pay all of the Debtors’ secured debt and unsecured creditors will need to fight to get any repayment. If you have questions or concerns about this bankruptcy case, please feel free to reach out to PRLT.