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Fashion brand owner, The Collected Group LLC, has secured court approval of its prepackaged reorganization plan that will put lenders in control of the company.

Collected, represented by Paul, Weiss, Rifkind, Wharton & Garrison, expects it to go into effect this week after U.S. Bankruptcy Judge Laurie Selber Silverstein in Wilmington, Delaware signed off on the plan during a virtual hearing on Tuesday. The plan, which is backed by private equity giant KKR & Co Inc, is expected to eliminate $150 million from the company’s $185.3 million funded debt stack and allow the company to restructure around its online and wholesale businesses.

KKR, represented by Proskauer Rose, was already Collected’s largest owner and lender. It will maintain its hold on the company alongside fellow lender Callodine Commercial Finance LLC.

Collected, which owns the Joie, Current/Elliott and Equipment labels, filed for bankruptcy in April. At its height, the company had 33 stores and counted celebrities from Jennifer Aniston to Meghan Markle as customers of its brands. After seeing sales drop dramatically amid the COVID-19 pandemic, the company closed its stores, shifted its focus to its online business, and obtained new financing from lenders.

In the fourth quarter of 2020, Collected reopened three of its stores in Boston, Greenwich, Connecticut and Newport Beach, California. But those reopened locations didn’t perform well, leading the company to conclude that brick-and-mortar retail operations were no longer a viable option.

Though the company sought out potential buyers in the months leading up to the bankruptcy, none of the offers that came through provided a high enough value for the company, chief restructuring officer Evan Hengel said in court papers.

Collected initially proposed a plan that would have left general unsecured creditors, which are owed $35.5 million, unpaid. The company has since reached a settlement with its unsecured creditors committee, represented by Kelley Drye & Warren, that provides them some recoveries. The plan now offers those creditors $500,000 in cash and the potential to receive up to $2 million more if the company is sold after the bankruptcy.

Lenders have also agreed to provide $14.5 million in exit financing.

Though retail bankruptcies were a constant throughout 2020 as the pandemic brought foot traffic in physical stores to a halt, the trend has largely died down in 2021.

The case is In re The Collected Group, U.S. Bankruptcy Court, District of Delaware, No. 21-10663.

For Collected: Brian Hermann, John Weber and Brian Bolin of Paul, Weiss, Rifkind, Wharton & Garrison; and Pauline Morgan, Andrew Magaziner and Joseph Mulvihill of Young Conaway Stargatt & Taylor

For the committee: Eric Wilson, Jason Adams and Lauren Schlussel of Kelley Drye & Warren; and Christopher Samis and Katherine Good of Potter Anderson & Corroon

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Maria ChutchianMaria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.