(Bloomberg)—Sequential Brands Group Inc., the parent company of brands including the Jessica Simpson fashion collection and Joe’s Jeans, filed for bankruptcy protection after the apparel industry was upended by changing consumer habits and the coronavirus pandemic.
The owner and licensor of brands such as Gaiam yoga (No. 700 in the 2021 Digital Commerce 360 Top 1000) filed its Chapter 11 petition in Wilmington, Delaware with plans to hold an auction as part of a deal with so-called Term B lenders. Sequential listed debts of $435 million and assets of $443 million in court papers. The company said it has arranged a $150 million loan to help fund its reorganization.
That loan and the rules for the proposed auction must be approved by the judge overseeing the case.
Retailers across the country have struggled with plunging revenues as COVID-19 precautions led to temporary shutdowns of physical stores and kept consumers at home. J. Crew Group Inc., Neiman Marcus Group LLC and J.C. Penney each filed for bankruptcy earlier in the pandemic.
Many retailers that carry Sequential’s brands were closed for part of last year, denting revenues. In late 2020, the company said it was considering a sale as part of a broad “exploration of strategic alternatives” in an effort to maximize shareholder value. The company unloaded its Heelys sneaker brand in April for $11 million.
In December, the Securities and Exchange Commission charged Sequential with violating antifraud, reporting, books and records and internal controls provisions of federal securities laws related to goodwill accounting in 2016 and 2017.
Among the biggest owners of the company is Martha Stewart Family Limited Partnership with nearly 11%, according to court documents.
The case is Sequential Brands Group, Inc. 21-11194, U.S. Bankruptcy Court, District of Delaware (Wilmington).