Sean 'Diddy' Combs approved to buy fashion line out of bankruptcy

Sean Combs arrives at the Met Gala in New York, May 7, 2018. REUTERS/Eduardo Munoz
  • Diddy wins auction with $7.55 million bid
  • Sale to close by end of the year

(Reuters) - Sean “Diddy” Combs has secured court approval to buy back his fashion brand Sean John from its bankrupt owner, GBG USA Inc.

U.S. Bankruptcy Judge Michael Wiles in Manhattan signed off on the sale during a brief hearing on Wednesday. There were no objections to the sale.

Combs' company SLC Fashion LLC made the highest bid for the brand at an auction on Monday, bumping its final offer to $7.55 million from its initial $3.3 million bid. Four other bids were submitted prior to the auction, GBG attorney Erin Ryan said during the hearing.

The sale is expected to close by the end of the year.

GBG filed for bankruptcy in July with around $238 million in long-term debt, blaming its financial strain on the combination of a decline in brick-and-mortar shopping, the economic impact of the COVID-19 pandemic and substantial royalty obligations. Most of its revenue was made by distributing its products to department stores and other retailers including Macy's, Costco, TJMaxx and Nordstrom.

Combs launched Sean John in 1998.

The case is In re GBG USA Inc, U.S. Bankruptcy Court, Southern District of New York, No. 21-11369.

For GBG: Rachel Strickland, Andrew Mordkoff, Ciara Sisco and Erin Ryan of Willkie Farr & Gallagher

For SLC Fashion: Alec Ostrow of Becker, Glynn, Muffly, Chassin & Hosinski

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