GLOBAL BRANDS GROUP USA FILES FOR BANKRUPTCY

The apparel manufacturer and owner of numerous brands, the Global Brands Group (GBG), filed for bankruptcy in the United States on July 29, filing a relevant claim with the US court.  The claim contains descriptions of a plan to sell the key assets.  Among the brands, there are those that will be sold in bankruptcy.

The company was actually established in 2005, when the Chinese firm Li & Fung Limited set up a wholesale business specializing in private labels and branded clothing.  By December, the company was registered in Bermuda Islands with the aim of spinning off into a separate enterprise, having become a 100% subsidiary of Li & Fung Ltd.

As early as 2014, the GBG’s shares began to be traded on the Hong Kong Stock Exchange separately from Li & Fung trading companies.  In the same year, the company announced the launch of a joint venture with David Beckham, and in 2016 participated in the development of a brand with Katy Perry.

In 2020, the company incurred losses of $ 584 million (in 2019, there were $ 388 million).

Despite this, the salary company’s CEO Richard Darling increased from $ 516 thousand to $ 6.6 million (more than 12 times) for the same period of time with the approval of the board of directors.

 ‘Over the past year and a half, the retail market has been hit hard by COVID-19, creating challenges for us and many others in our industry’, Darling said in a statement.  ‘Our business has been impacted by ongoing structural shifts in retail, as well as continued geopolitical tensions that have disrupted supply chains.  These factors were particularly detrimental to the company's operations in the United States’.

According to the company's CFO Mark Caldwell, the company’s own sales fell by 44% in the past fiscal year (it ended in March 2021).  Clothing buyers during tended to avoid shops, offices, and participation in social events that increase consumer spending on wardrobe.  This was compounded by liquidity problems as many suppliers demanded cash delivery for fear of financial problems.

As a result, on July 21, 2021, the Hong Kong Stock Exchange suspended trading the company's shares, since GBG’s representatives were unable to submit their annual financial results in time.

At the time of the suspension of trading, the price of one share was HK $ 0.189, representing a market capitalization of about HK $ 194.4 million ($ 25 million).

Bankruptcy in the United States occurred immediately after the company had sold the assets associated with the Frye and Spyder brands.  The buyer was the American company Authentic Brands Group LLC, which has already announced the transfer of brands to new investors.

Now GBG has put up for auction its application for the sale of the Aquatalia brand worth $ 17.3 million. The company expects to get rid of debts to large investors as a result of bankruptcy.  In particular, the company owes 2 million royalties to Sequential Brands, 3.6 million to ABG, 860 thousand to Marquee Brands and about 6 million to Kenneth Cole.