ascena will close a select number of Ann Taylor, LOFT, Lane Bryant and Lou & Grey stores. Credit: Phillip Pessar.

Ascena Retail group and some of its subsidiaries have filed Chapter 11 petitions in the US Bankruptcy Court for the Eastern District of Virginia.

The decision is taken as the company entered into a restructuring support agreement (RSA) with over 68% of its secured term lenders.

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With the restructuring, the company expects to reduce its debt by approximately $1bn.

Ascena interim executive chair Carrie Teffner said: “The meaningful progress we have made driving sustainable growth, improving our operating margins and strengthening our financial foundation has been severely disrupted by the Covid-19 pandemic.

“As a result, we took a strategic step forward today to protect the future of the business for all of our stakeholders.

“The RSA formalises our lenders’ overwhelming support for a comprehensive plan to deleverage our balance sheet, right-size our operations and inject new capital into the business.

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As part of the restructuring, ascena plans to close a significant number of Justice stores and a select number of Ann Taylor, LOFT, Lane Bryant and Lou & Grey stores.

It will also close all stores across brands in Canada, Puerto Rico and Mexico, as well as all Catherines stores closure.

Additionally, the company signed asset purchase agreement City Chic to divest the Catherines intellectual property assets and to shift its e-commerce business City Chic subsidiary.

Meanwhile, it will continue to operate reduced numbers of Ann Taylor, LOFT, Lane Bryant, Justice and Lou & Grey brands retail stores and its online business.

In May last year, ascena retail group completed the divesture of a majority interest in its subsidiary Maurices Incorporated, to British private equity firm OpCapita’s affiliate for approximately $300m.