True Religion Inc. has filed for Chapter 11 bankruptcy in an effort to slash its debt of about $500 million, with plans to emerge from the process as soon as possible.
True Religion joins major retailers such as Payless Shoe Source, American Apparel, Eastern Mountain Sports and several others in a retail climate where more shoppers are gravitating towards online and away from physical stores.
Reuters reported that True Religion suffered from the growth of popular athleisure brands and a move away from denim to casual sports clothing. Its lenders will receive most of the equity in the reorganization, with the debt load projected to fall by $350 million to $140 million; the company is hoping to exit bankruptcy in as little as four months.
“After a careful review, we are taking an important step to reduce our debt, reinvigorate True Religion’s iconic brand and position the company for future growth and success,” said CEO and president John Ermatinger in a statement.
By dramatically improving True Religion’s capital structure, Ermatinger said the company will continue its business operations as usual, provide employees and business partners with long-term stability and enable the flexibility needed to invest in and grow its digital operations.