If the filing person has previously filed a statement on
Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule
because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934
("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
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CUSIP No. 16444H102
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13D
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Page 2 of 3 Pages
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1.
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NAMES OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Cove Street Capital, LLC I.R.S IDENTIFICATION NO 27-5376591
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2.
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions)
(a) ¨
(b) ¨
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3.
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SEC USE ONLY
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4.
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SOURCE OF FUNDS (see instructions)
OO
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5.
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨
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6.
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CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
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7.
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SOLE VOTING POWER
0
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8.
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SHARED VOTING POWER
4,116,626
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9.
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SOLE DISPOSITIVE POWER
0
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10.
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SHARED DISPOSITIVE POWER
4,384,676 (1)
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11.
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,384,676
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12.
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(see instructions) ¨
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13.
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.0% (2)
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14.
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TYPE OF REPORTING PERSON (see instructions)
IA
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(1) The shared dispositive power includes 268,050 shares of
a separately managed account, where CSC does not have any voting power over.
(2) The percentage was calculated based on 15,660,352 shares of Common Stock, as follows: (i) 14,045,000 shares of Common Stock outstanding as of August 3, 2018 as indicated by the issuer, plus (ii) 1,615,352 shares
of Common Stock issuable upon exercise of warrants issued to Cove Street Capital and exercisable as of or within 60 days
within the date this Statement is filed with the Commission.
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CUSIP No. 16444H102
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13D
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Page 2 of 3 Pages
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1.
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NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Jeffrey Bronchick
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2.
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions)
(a) ¨
(b) x
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3.
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SEC USE ONLY
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4.
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SOURCE OF FUNDS (see instructions)
PF
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5.
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨
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6.
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CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES OF AMERICA
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
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7.
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SOLE VOTING POWER
25,000
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8.
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SHARED VOTING POWER
4,116,626
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9.
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SOLE DISPOSITIVE POWER
25,000
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10.
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SHARED DISPOSITIVE POWER
4,384,676 (1)
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11.
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,409,676
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12.
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(see instructions) ¨
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13.
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.2% (2)
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14.
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TYPE OF REPORTING PERSON (see instructions)
IN
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(1) The shared dispositive power includes 268,050 shares of
a separately managed account, where CSC does not have any voting power over.
2) he percentage was calculated based on 15,660,352 shares
of Common Stock, as follows: (i) 14,045,000 shares of Common Stock outstanding as of August 3, 2018 as indicated by the
issuer, plus (ii) 1,615,352 shares of Common Stock issuable upon exercise of warrants issued to Cove Street Capital and
exercisable as of or within 60 days within the date this Statement is filed with the Commission.
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CUSIP No. 16444H102
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13D
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Page 2 of 3 Pages
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Item 1. Security and Issuer.
This Amendment No. 1 to Schedule 13D amends and restates (as amended and restated, the "Schedule 13D") in its entirety the
statement on Schedule 13D filed on February 2, 2018 (the "original Schedule 13D") with the U.S. Securities and Exchange Commission
(the "Commission") by Cove Street Capital, LLC and Jeffrey Bronchick with respect to the common stock, par value $0.02 per
share ("Common Stock"), of Cherokee Inc., a Delaware corporation (the "Issuer"). The address of the principal executive offices
of the Issuer are located at 5990 Sepulveda Boulevard, Sherman Oaks, CA 91411.
Item 2. Identity and Background.
a) This statement on Schedule 13D is being filed under the Securities Exchange Act of 1934 by Cove Street Capital, LLC, a
Delaware limited liability company ("Cove Street Capital" or "CSC"), and Mr. Jeffrey Bronchick, an individual.
b) The address
of the principal office of each CSC and Mr. Bronchick is 2101 East El Segundo Boulevard, Suite 302, El Segundo, CA 90245.
c)
The principal business of CSC is to serve as the investment advisor to certain separately managed accounts. Mr. Bronchick
is the Portfolio Manager and Founder of Cove Street Capital LLC.
d) Neither CSC nor any of its members has, during the last
five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
e) Neither CSC
nor any of its members was, during the last five years, a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and, as a result of such proceeding, was or is subject to a judgment, decree or final order (1)
enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or (2)
finding any violation with respect to such laws.
f) CSC is a Delaware limited liability company. Mr. Bronchick is a citizen
of the United States of America.
Item 3. Source or Amount of Funds or
Other Consideration.
The information set forth in Item 4 and Item 6 of this Schedule 13D is incorporated herein by reference.
CSC, in its capacity
as an investment adviser, expended an aggregate of approximately $28,301,133 of its separately managed account clients' capital
to acquire 2,769,324 of the shares of Common Stock held collectively by them prior to February 2, 2018. The remaining 1,615,352
shares of Common Stock held by the separately managed account clients were acquired pursuant to transactions and arrangements
described below. No monies were borrowed for any such acquisitions.
Mr. Bronchick expended
an aggregate of approximately $73,631 to acquire the 25,000 shares of Common Stock held by him prior to February 2, 2018.
August 2017 Financing;
On August 11, 2017,
Cove Street Capital and other investors entered into common stock purchase agreements with the Issuer, pursuant to which,
on August 16, 2017, such investors collectively purchased from the Issuer an aggregate of 947,870 shares of Common Stock in
a private placement financing at a per share purchase price of $4.22 and for an aggregate purchase price of approximately
$4.0 million. Of such shares, Cove Street Capital purchased from the Issuer 236,967 shares of Common Stock for a purchase
price of approximately $828,794. In addition, pursuant to the terms of the purchase agreements, Cove Street Capital and certain
of the other investors agreed to grant to the Issuer certain equity commitment rights, and in consideration for the grant
of such rights, on August 18, 2017, the Issuer issued to such investors warrants to purchase up to an aggregate of 326,695
shares of Common Stock at an initial exercise price of $4.22 per share. Of such warrants, the Issuer issued to Cove Street
Capital a warrant to purchase up to 59,241 shares of Common Stock, totaling to 296,208 shares. All of the warrants are exercisable
at any time from March 5, 2018 until the seven-year anniversary of the initial issuance date, may be exercised in cash or
on a "cashless" basis, and are subject to customary adjustments in the event of stock dividends or other distributions, stock
splits, or mergers, reclassifications or similar transactions. As a result of certain subsequent events, the Issuer has reported
that the equity commitment rights granted by Cove Street Capital and the other investors under the purchase agreements are
no longer in effect and will not be exercised or called.
December 2017 Financing;
On December 7, 2017, Cove Street Capital and
certain other investors entered into a junior participation letter agreement with Cerberus Business Finance, LLC ("Cerberus"),
as administrative and collateral agent under the Issuer's senior secured credit facility for aggregate borrowings of $50.0
million in principal amount, pursuant to which such investors collectively purchased from the existing lenders under such
credit facility an aggregate of $11.5 million in junior and subordinate participation interests under the credit facility.
Of such participation interests, Cove Street Capital purchased a participation interest equal to $7 million, which was paid
by Cove Street Capital in its capacity as an Investment Adviser to purchase on behalf of its clients. As an inducement to
the investors' agreement to purchase such participation interests, on December 7, 2017, the Issuer issued to such investors
warrants to purchase up to an aggregate of 511,111 shares of Common Stock at an initial exercise price of $2.25 per share.
Of such warrants, the Issuer issued Cove Street Capital a warrant to purchase up to 311,111 shares of Common Stock. All of
the warrants are exercisable at any time from December 7, 2017 until the seven-year anniversary of the original issuance date,
may be exercised in cash or on a "cashless" basis, and are subject to customary adjustments in the event of stock dividends
or other distributions, stock splits, or mergers, reclassifications or similar transactions.
August 2018 Financing;
On August
3, 2018, Cove Street Capital and certain other investors entered into new subordinated promissory notes with the Issuer for
aggregate borrowings of $13.5 million in principal amount, pursuant to which such investors collectively swapped an aggregate
of $11.5 million in junior and subordinate participation interests under the Issuer's former credit facility for $11.5 million
of the new subordinated promissory notes with $2 million additional principal provided solely by Cove Street Capital. Of the
total $13.5 million in principal, Cove Street Capital's ownership represents an amount equal to $9 million, which was paid
by Cove Street Capital in its capacity as an investment adviser to purchase on behalf of its clients. As an inducement to
the investors' agreement to swap their participation interests in exchange for the new subordinated promissory notes, on August
3, 2018, the Issuer issued to such investors warrants to purchase up to an aggregate of 1,600,000 shares of Common Stock at
an initial exercise price of $0.50 per share. Of such warrants, the Issuer issued Cove Street Capital warrants to purchase
up to 1,245,000 shares of Common Stock. All of the warrants are exercisable at any time from August 3, 2018 until the seven-year
anniversary of the original issuance date, may be exercised in cash, and are subject to customary adjustments in the event
of stock dividends or other distributions, stock splits, or mergers, reclassifications or similar transactions.
Item 4. Purpose of Transaction.
The information set forth in Item 3 and Item 6 of this Schedule 13D is incorporated herein by reference. The Reporting Persons
acquired and hold the securities of the Issuer as reported in this Schedule 13D for general investment purposes.
With the participation
in the financings as noted in Item 3 and its increased economic ownership, Cove Street Capital entered into an Exchange Agreement
with the Issuer pursuant to which, among other things, Cove Street Capital has the right to designate two individuals to serve
as members of the board of directors of the Issuer (the "Board") and to designate one of the designated board members to serve
on each committee of the Board. At any time that less than two individuals designated by Cove Street Capital are seated on
the Board, the Issuer and the Board will maintain a vacancy or vacancies on the Board. If the size of the Board is expanded,
for any reason, Cove Street Capital will have the right to designate additional Board nominees in order to maintain its proportionate
representation. Cove Street Capital will maintain this right for as long as Cove Street Capital and its affiliates collectively
beneficially own at least 5% of the Issuer's outstanding Common Stock. The Reporting Persons are engaged in the investment
business.
The Reporting Persons, may from time to time, depending on prevailing market, economic or other conditions and at
their discretion, acquire additional or dispose of shares of Common Stock, or engage in discussions with the Issuer concerning
any such acquisitions or dispositions or other investments in the Issuer. The Reporting Persons intend to review their investment
in the Issuer on a continuing basis and, depending upon the price and availability of shares of Common Stock or other securities
of the Issuer, subsequent developments affecting the Issuer, the Issuer's business and prospects, other investment and business
opportunities available to the Reporting Persons, general stock market and economic conditions, tax considerations and other
factors deemed relevant by the Reporting Persons, may decide to increase or decrease the size of their investment in the Issuer
at any time.
Item 5. Interest in Securities of the
Issuer.
The information contained on the cover pages to this Schedule 13D is incorporated herein by reference.
(a) As of the
date of this Schedule 13D, each of the Reporting Persons beneficially owns shares of Common Stock in such numbers as set
forth on the cover pages of this Schedule 13D. The total number of shares each of the Reporting Persons beneficially owns
represents such percentages as set forth on the cover pages to this Schedule 13D of the Common Stock outstanding. The
percentages used in this Schedule 13D are calculated based on 15,660,352 shares of Common Stock, as follows: (i) 14,045,000
shares of Common Stock outstanding as of August 3, 2018, as indicated by the Issuer; plus (ii) 1,615,352 shares of Common
Stock issuable upon exercise of warrants issued to Cove Street Capital and exercisable as of or within 60 days within the
date this Statement is filed with the Commission.
(b) None of the Reporting Persons has sole power to vote or direct the vote or sole power to
dispose or direct the disposition of the Common Stock reported herein, except that Mr. Bronchick has sole voting and dispositive
power with respect to 25,000 shares of Common Stock.
(c) Except as set forth in this Schedule 13D, there have been
no transactions in the Common Stock effected during the past 60 days by any person named in Item 2 hereof.
(d) Other than as described herein, no other persons have the right to receive, or the power to direct the receipt
of, dividends from or proceeds from the sale, of the shares of Common Stock reported in the Schedule 13D.
(e) Not applicable.
Item 6. Contracts, Arrangements,
Understandings or Relationships with Respect to Securities of the Issuer.
On August 3,
2018, CSC and the Issuer entered into the Agreement defined and described in Item 4 above and attached as Exhibits in Item
7 hereto.
Except as otherwise described in this Schedule 13D, there are no contracts, arrangements, understandings, or relationships
(legal or otherwise) among CSC, or between any third party, with respect to any securities of the Issuer.
Item 7. Material to Be Filed as
Exhibits.
Exhibit 1: Joint
Filing Agreement, dated August 9, 2018, by and among the Reporting Persons
Exhibit 2: Form of Warrant to Purchase Shares of Common Stock, issued on August 11, 2017 (incorporated by reference to Exhibit 4.1 to the Issuer’s Current Report on Form 8-K filed with the Commission on August 14, 2017).
Exhibit 3: Form of Warrant to Purchase Shares of Common Stock, issued on December 7, 2017 (incorporated by reference to Exhibit 4.2 to the Issuer’s Quarterly Report on Form 10-Q filed with the Commission on December 7, 2017).
Exhibit 4: Form
8-K filed by Cherokee Inc, dated August 3, 2018.
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CUSIP No. 16444H102
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13D
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Page 3 of 3 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this statement is true, complete
and correct.
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COMPANY NAME
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/s/ Merihan Tynan
Merihan Tynan
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Chief Compliance Officer
Insert Title
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August 9, 2018
Insert Date
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Jeffrey Bronchick
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/s/ Jeffrey Bronchick
Jeffrey Bronchick
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August 9, 2018
Insert Date
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