Ann Taylor’s former owner has obtained bankruptcy court approval for its revised reorganization plan after a judge rejected certain legal protections for people and entities connected to the company contained in an earlier version of the plan, Reuters reported. U.S. Bankruptcy Judge Frank Santoro of the Eastern District of Virginia signed off on Mahwah Bergen Retail Group Inc.’s amended plan during a brief hearing on Thursday. Mahwah, formerly known as Ascena Retail Group, had secured approval of its prior plan last year but was forced to return to bankruptcy court in January after the plan's so-called nondebtor releases that would have shielded non-bankrupt individuals and entities from future litigation were voided on appeal. Ascena filed for chapter 11 protection in July 2020 with more than $1 billion in debt, part of the wave of retail bankruptcies that occurred in the first few months after the COVID-19 pandemic hit the U.S. Ascena later sold its assets, including apparel retailers such as Ann Taylor, Lane Bryant and Loft, to private equity firm Sycamore Partners. In January, U.S. District Judge David Novak of the Eastern District of Virginia held that the nondebtor releases contained in the plan were void and unenforceable. Judge Novak’s decision did not interfere with the Sycamore sale, which had already closed. In his January decision, Judge Novak called the releases “shocking” and said that the bankruptcy court that approved them had exceeded “the constitutional limits of its authority.” As a result, Mahwah, which now exists solely to wind down its estate, reworked the plan to provide that the releases "should be deemed severed from the Plan,” according to court papers.
