(Reuters) - U.S. fashion footwear company Nine West Holdings Inc intends to file for bankruptcy as soon as this week with a plan to sell the intellectual property of its flagship brand to Authentic Brands Group LLC, people familiar with the matter said on Thursday.
The proceeds from the sale will pay down some of Nine West’s approximately $1.5 billion in debt, increasing the chances that the company will emerge from a planned bankruptcy, the sources said.
Nine West missed a debt interest payment in March, setting off a 30-day period in which the accessories seller must either make the payment or face bankruptcy.
The company’s creditors plan to take ownership stakes in Nine West’s remaining business, including its denim line sold in mass merchandisers such as Walmart Inc (WMT.N) and Sears Holdings Corp SHLD.O, in exchange for forgiving some of their debt, the sources said.
The sources cautioned that an agreement between Authentic Brands and Nine West has not been finalized and asked not to be identified because the matter is confidential. Authentic Brands, Nine West and Sycamore Partners, the private equity owner of Nine West, declined to comment.
Brand licensing firm Authentic Brands recently announced it would buy the sporty Nautica brand from VF Corp (VFC.N) and plans to team up with a partner on the Nine West acquisition, according to the sources.
U.S. retailers are going through a period of upheaval, with more than 15 filing for bankruptcy last year as more shoppers buy online. Nine West competitor Aerosoles Group filed for bankruptcy last year.
Sycamore acquired the Jones Group Inc, then the parent of Nine West, in a deal valued at $2.2 billion in 2014. Sycamore then sold high-end shoe wear lines Stuart Weitzman and Kurt Geiger, part of the Jones Group.
Some creditors of Nine West plan to pursue claims against Sycamore for the sale of Kurt Geiger and Stuart Weitzman, the sources said. The creditors will claim that the divestitures of the shoe companies made Nine West insolvent, the sources said.
Authentic Brands has done business with Sycamore before. It bought the Jones New York label from Sycamore in 2015.
Reporting by Jessica DiNapoli and Andrew Berlin in New York; Editing by Bill Rigby