Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on July 23, 2020, Ascena Retail Group,
Inc. (the “Company”) and certain of its subsidiaries (together with the Company, the “Debtors”) filed voluntary
petitions (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”)
in the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”). The Chapter 11
Cases were filed by the Debtors to implement the terms of a Restructuring Support Agreement, dated July 23, 2020 (together with
all exhibits and schedules thereto, the “RSA”), by and among the Company and certain of its subsidiaries (each, a “Company
Party” and collectively, the “Company Parties”) and members of an ad hoc group of lenders (the “Consenting
Stakeholders”) under the Term Credit Agreement, dated as of August 21, 2015 (as amended, restated, supplemented or otherwise
modified from time to time, the “Prepetition Term Credit Agreement”), among the Company, AnnTaylor Retail, Inc., the
lenders party thereto (the “Prepetition Term Lenders”) and Goldman Sachs Bank USA, as administrative agent.
Asset Purchase Agreement
On November 26, 2020, the Company, together with certain of
its subsidiaries (collectively, the “Sellers”), entered into an asset purchase agreement (the “Asset Purchase
Agreement”) with Premium Apparel LLC (the “Purchaser”), an affiliate of Sycamore Partners Management, L.P. Pursuant
to the Asset Purchase Agreement, the Purchaser will acquire assets relating to the Sellers’ Ann Taylor, LOFT, Lane Bryant
and Lou & Grey brands pursuant to Section 363 of the Bankruptcy Code for approximately $540.0 million, subject to certain customary
purchase price adjustments as set forth in the Asset Purchase Agreement, as well as assume certain
related liabilities. Under the Asset Purchase Agreement, the Purchaser has committed to offer to employ associates of the Sellers
whose duties are primarily related to the Ann Taylor, LOFT, Lane Bryant and Lou & Grey brands or the corporate functions of
the Sellers, in each case who meet certain conditions set forth therein. The consummation of the transactions contemplated by the
Asset Purchase Agreement (the “363 Sale”) is subject to specified closing conditions, including approval of the Bankruptcy
Court.
The Asset Purchase Agreement contains certain customary termination
rights for the Sellers and the Purchaser. In certain circumstances, including approval by the Bankruptcy Court of an Alternative
Transaction (as defined in the Asset Purchase Agreement), upon termination, the Sellers will be obligated to pay the Purchaser
a termination fee of $16.2 million and reimburse the Purchaser for up to $5.4 million of expenses incurred in connection with the
Asset Purchase Agreement. In addition, if the Asset Purchase Agreement is terminated by the Company for certain Purchaser breaches,
including because the Purchaser does not complete the 363 Sale in breach of the Asset Purchase Agreement, the Company will be entitled
to receive a termination fee of $54.0 million, which the Purchaser has deposited into escrow.
The foregoing description of the Asset Purchase Agreement is
not complete and is qualified in its entirety by reference to the Asset Purchase Agreement, a copy of which is attached to this
Current Report on Form 8-K as Exhibit 2.1 and is hereby incorporated by reference in this Item 1.01.
Second Amended Restructuring Support Agreement
In connection with the Company’s entry into the Asset
Purchase Agreement, on November 26, 2020, the Company Parties and the Consenting Stakeholders entered into the Second Amended Restructuring
Support Agreement (the “Amended RSA”). Capitalized terms used but not otherwise defined in this “Second Amended
Restructuring Support Agreement” section of this Current Report on Form 8-K have the meanings given to them in the Amended
RSA.
In addition to providing for the Consenting Stakeholders’
support of the 363 Sale, the Amended RSA provides, among other things, that each Consenting Stakeholder and Prepetition Term Lender
will receive its pro rata share (based on its term loan holdings under the Prepetition Term Credit Agreement) of cash pursuant
to distributions in accordance with the schedule set forth in Section 6.01(p) of the Amended RSA instead of equity in reorganized
Ascena as previously contemplated in the RSA. The Amended RSA does not contemplate material changes to the treatment of any other
stakeholders’ claims, including holders of general unsecured claims, and in particular, the Amended RSA continues to provide
that the existing common equity in the Company be cancelled.
Also pursuant to the Amended RSA, to allow for additional time
for the Company to complete the 363 Sale, (i) the date on which the Required Consenting Stakeholders may terminate the Amended
RSA if the Bankruptcy Court has not yet entered the Confirmation Order has been extended from November 10, 2020 (which is 110 days
after the Chapter 11 Cases commenced) to February 25, 2021, (ii) the date on which the Required Consenting Stakeholders may terminate
the Amended RSA if the Plan Effective Date has not yet occurred has been extended from November 30, 2020 (which is 130 days after
the Chapter 11 Cases commenced) to March 11, 2021, and (iii) the date on which an individual Consenting Stakeholder may, as to
itself only, terminate the Amended RSA if the Plan Effective Date has not yet occurred has been extended from January 23, 2021
(which is six months after the Chapter 11 Cases commenced) to March 31, 2021. Also pursuant to the Amended RSA, each Consenting
Stakeholder who is also a lender under the DIP Term Facility agreed, in its capacity as a lender under the DIP Term Facility, to
corresponding amendments to milestones regarding entry of the Confirmation Order and the Plan Effective Date that are included
in the DIP Term Loan Credit Agreement.
Although the Company Parties intend to pursue the restructuring
contemplated by the Amended RSA, there can be no assurance that the Company Parties will be successful in completing a restructuring
or any other similar transaction on the terms set forth in the Amended RSA or at all. In particular, the transactions contemplated
by the Amended RSA are subject to approval by the Bankruptcy Court, among other conditions.
The foregoing description of the Amended RSA is not complete
and is qualified in its entirety by reference to the Amended RSA, a copy of which is attached to this Current Report on Form 8-K
as Exhibit 10.1 and is hereby incorporated by reference in this Item 1.01.