US denim retailer Lucky Brand Jeans has filed for Chapter 11 bankruptcy protection, the latest retailer to buckle amid the continued economic slump caused by the coronavirus pandemic. Following its filing, the company revealed that it is currently engaging in talks to sell the company and that it already has a number of deals lined up.

Lucky Brand Jeans, which has been operating since 1990, plans to close down 13 of its stores. The company added that it may be forced to shut down additional stores during the bankruptcy process. The first batch of stores that will be closed will include its Chicago outlet located at The Shops at North Bridge mall. The company provided a list of all of its affected stores on its website.

Similar to other retailers, revenues for the company since the start of the year had dramatically plummeted. The company stated that the main reason for its decision to file for bankruptcy was the continued decline in demand for its products compounded by the forced closures of its stores during the height of the pandemic. Lucky Brand also admitted to having very limited liquidity during the first two quarters of the year, affecting its ability to acquire new inventory from vendors who no longer accepted credit.   

The company officially filed for bankruptcy protection on Friday last week at the federal bankruptcy court in Delaware. In its court filing, the retailer's chief restructuring officer, Mark Renzi, revealed that there was a proposal made by apparel retail operator SPARC Group to acquire the company for $191.6 million. Under the proposed deal, SPARC agreed to pay Luck Brand $140.1 million in cash and $51.5 million in credit.

Lucky Brand claims that the deal is sufficient enough to enable the continued operations of its network of outlets throughout the country. SPARC operates various apparel retail brands, including Nautica and Aeropostale, which are owned by Authentic Brands Group and Simon Property Group.

The Los Angeles-based denim company stated that it has not yet agreed to SPARC's proposal and that it has a number of backup bids in place. During the bankruptcy process, Luck Brand plans to ask the court's approval to conduct a bidding process to see if it can get better offers from other potential buyers. The company expects to close a sale by August at the earliest.

Lucky Brand was previously owned by Fifth & Pacific Companies prior to its sale to Leonard Green & Partners in 2013. The company owns and operates around 200 outlets in the US, mostly located inside shopping malls, including those owned by Simon Property Group, one of its key landlords.