Dressbarn and Ann Taylor owner headed for bankruptcy? Lenders reportedly nervous

The company that owns women's retailers Ann Taylor, Loft, Lane Bryant and Dressbarn owes $1.4 billion to lenders and isn't returning their phone calls, according to a New York Post report.

Ascena Retail Group hasn't missed payments on its debts, but more than 40 lenders are nervous that Ascena may be eyeing bankruptcy.

“It’s been radio silence from Ascena and the lenders are just spooked at this point,” a source told the Post.

Ascena has reportedly been locked in a high-stakes real estate war with the landlords of Dressbarn's 650 stores. If landlords don't cooperate, the retailer will owe over $302 million in rent to landlords at their various locations. In May, Ascena gave landlords the choice between Dressbarn staying open until August to pay rent through October, or operating stores through the holiday season to pay off the remainder of rent for the year.

The company insinuated Dressbarn could put in Chapter 11 bankruptcy to relinquish debt. The Post reported the $6.6 billion company was interviewing restructuring law firms.

Ascena is hopeful that it will raise funds from bids due on Sept. 5 for Dressbarn’s intellectual property. While the majority of its customers are over 50, sales rapidly decline by more than 23 percent over the past several years to an estimated $740 million this year.

The lending group, which includes Franklin Resources, Eaton Vance, Lord Abbett, and Greywolf Capital, has been retaining legal counsel in the event they need representation in a legal battle.

Dressbarn was founded by Elliot S. Jaffe and Roslyn S. Jaffe in 1962. Many retailers are battling the pressures from growing online retail sales and increasing real estate costs. Luxury retailer, Barneys NYC filed for Chapter 11 bankruptcy in early August citing real estate burdens.


A spokesperson from Ascena retail group told FOX Business “Ascena is in full compliance under its term loan, which is due in August 2022, and revolving credit facility and intends to remain so, is current on all obligations, and has substantial cash on its balance sheet," The spokesperson added, "The company regularly engages with its lenders.”