Case Summary
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Case Summary
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Case in point, True Religion Apparel Incorporated case summary. Just to recap where we are, True Religion emerged from its first bankruptcy in 2017, got their old CEO who was hoping to rekindle the magic from their more successful period, in November of 2019. Over the next several months, however, things did not get much better, and by early 2020, we found ourselves in the midst of a pandemic, which caused lockdowns of retail outlets and a greater push to online retailing. In April of 2020, TRA filed for Chapter 11 bankruptcy, and received the debtor in possession financing already discussed. As of October 2020, TRA emerged from its second bankruptcy. What does this mean? It means that the plan that was put in place, laid out in the 13-week cashflow statement that we've looked, at and backed by the new money loans, put TRA back on its feet. It's clearly not out of the woods, as it was only three years earlier that the company was in the same position and also emerged from bankruptcy, but let's take a look now at how this was accomplished. We spent some time looking at this cashflow statement in the last section, but again, this was the plan that was put forth to the court, utilizing the new money loans. The plan depended on the reopening of stores in June and July, as well as the strong execution of their business plan by Mr. Buckley. So how did True Religion actually emerge from bankruptcy? Here we have, in excruciating detail and very small detail, the actual cash flows from the time period 13 April to July 4th, which is approximately the 13-week cash flow period. It's actually one week short at 12 weeks, but companies are not required to post their actual 13-week cash flows, only projected. They do, while they're in bankruptcy, however, file monthly operating statements, so we are able to get a cumulative operating statement for these three months. The projected cumulative cash receipts from 13th of April to 11th of July were 11.3 million. However, the actual cash flows that the company achieved were 24 million. Clearly, things happened for the better in terms of both online shopping benefiting TRA directly, and in terms of the stores opening and customers coming back to shop. However, speaking of stores, Simon Property Group, which held the leases on a majority of TRA stores was extremely flexible in offering rent holidays and restructurings. Without this, TRA probably would not have made it. Lastly, and most importantly, the projected operating cash flows through 11 July, on the 13-week cash flow statement were negative 8.3 million. TRA was able to flip this script entirely and bring in positive 7.1 million cash flow. This was a happy result, indeed, and the main reason why TRA was able to emerge from bankruptcy successfully and relatively quickly.