On the heels of an array of fashion and retail bankruptcy filings that began to unfold over the course of the year in 2016, New York-based designer Bibhu Mohapatra and retailers The Limited, Wet Seal, and Payless all made headlines when they filed for Chapter 11 protection in early 2017. They were swiftly followed by a handful of additional filings by other retailers, signaling that there is no end in sight to the constant string of fashion and other retail companies struggling financially and looking to bankruptcies courts for protection from their creditors.

For the uninitiated, Chapter 11 bankruptcy – one of the most commonly utilized forms of bankruptcy – allows a company to continue operating while it executes a reorganization plan. Chapter 11 can take a number of forms, but in short: A chapter 11 case begins with the filing of a petition with the bankruptcy court by the debtor (the entity that owes the debt – aka the retailers in the cases at hand). This is followed by the debtor proposing and executing a reorganization plan, which may be used to compromise or even eliminate certain classes of debt.

All the while, the debtor usually remains in possession of his assets and continues to operate any business, subject to the oversight of the court and the creditors committee. Typically, a company that has filed for Chapter 11 bankruptcy trying to stay in business, and as indicated below, this complex proceeding can be very effective in solving short term business problems in an otherwise viable company or winding down a company with valuable assets. (Also included below are instances in which brands have entered into administration, an insolvency process in the United Kingdom by which a company is “placed under the control of an insolvency practitioner to enable the insolvency practitioner to achieve objectives laid down by statute.”)

Fashion and Retail-Related Bankruptcies

Here is a look at some of the most recent fashion-related bankruptcy filings, as well as some significant ones dating back a bit further.

August 2022 – Secoo

Secoo has filed for bankruptcy for a second time in under a year, with the Chinese e-commerce luxury goods retailer’s corporate entity Beijing Siku Shangmao Co. lodging a bankruptcy petition with the First Intermediate People’s Court of Beijing Municipality on August 12, according to public records database Tianyancha, after withdrawing an earlier petition. In addition to over-investing in live-streaming and a blockchain-empowered authentication service, analysts state that Secoo has also been dragged down by a fall in demand for luxury goods in China, where national retail sales were up just 3.1 percent year-over-year in June.

Founded in 2008 by Chinese entrepreneur Richard Li Rixue, Secoo grew from a resale player to become China’s largest luxury goods retailer, with a 2017 initial public offering on Nasdaq raising $140 million, per SCMP, which notes that in December 2021, the company received a delisting warning from Nasdaq after its closing bid price for 30 consecutive business days fell below $1 per share, the exchange’s minimum bid price requirement. Secoo was recently granted a second grace period, which lasts until December 12, 2022, to comply with the minimum bid price requirement. According to its 2021 annual report, Secoo recorded a 48 percent year-over-year drop in revenue and a net loss of $88.8 million.

June 2022 – Revlon

Revlon filed for Chapter 11 protection in with a New York bankruptcy court on June 15. President and CEO Debra Perelman stated that despite enduring demand for its products, a “challenging capital structure has limited our ability to navigate macro-economic issues in order to meet this demand.” The New York-headquartered cosmetics giant – which owns the marquee Revlon brand, along with Elizabeth Arden, Almay, and licenses for Elizabeth Taylor, Britney Spears, Juicy Couture, and Christina Aguilera, among others – “expects to receive $575 million in debtor-in-possession financing from its existing lender base, which will help to support its day-to-day operations,” per CNBC. Perelman noted that bankruptcy protection will “allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth.”

May 2022 – Missguided

Missguided has entered into administration, citing the “extremely challenging” retail environment. Teneo Financial Advisory has been appointed as joint administrator along with the British fast fashion brand. According to Reuters, Missguided will continue to operate as usual while they seem a buyer for the business. “The joint administrators will now seek to conclude a sale of the business and assets, for which there continues to be a high level of interest from a number of strategic buyers,” Teneo managing director Gavin Maher said on Monday.

UPDATE (June 1, 2022): British fashion group Frasers has agreed to acquire Missguided, confirming that it will pay 20 million pounds ($25.2 million) for Missguided’s intellectual property.

FY 2021

November 2021 – Roland Mouret

Roland Mouret has entered into administration, roughly a month after the high fashion brand filed a notice of its intent to appoint administrators after the pandemic destroyed demand for his business. The London-based brand, which is in the business of making high-end formalwear and which counts fans that range from Demi Moore to the Duchess of Cambridge, revealed this fall that its sales dropped by 80 percent in the midst of the pandemic.

August 2021 – Sequential Brands Group

Sequential Brands Group, Inc. announced on August 31 that together with its wholly-owned subsidiaries, it has commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware. The company, which owns Joe’s Jeans and Jessica Simpson’s eponymous label, says it “determined that, as a result of the significant debt on its corporate balance sheet, it was no longer able to operate its portfolio of brands.” The company did not reveal the site of its assets and liabilities, but they have both been estimated to be about $500 million.

The company has revealed that it plans to hold an auction as part of a deal with its lenders, with “two initial bidders offering $375 million for many of the company’s assets,” per Bloomberg, and Jessica Simpson, herself, expected to try to buy back her brand.

July 2021 – Global Brands Group

GBG USA, Inc. filed a Chapter 11 petition on July 29, 2021 in the Bankruptcy Court for the Southern District of New York. The company – which sells branded fashion accessories, footwear, and apparel under owned and licensed brands, including Fiorelli, Sean John (in connection with which BGB is being sued by rapper-slash-apparel mogul Sean “Diddy” Combs), AllSaints, Navigare, Dirk Bikkembergs, Dimensione Danza, Skechers, Lego, Disney, Star Wars, and Mattel – estimates that it has between $1 billion and $10 billion in both assets and liabilities. 

June 2021 – Alex and Ani

Alex and Ani filed a petition for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware on June 9, citing assets and liabilities that both range from $100 million to $500 million. The Rhode Island-based jewelry company, which was founded in 2004, counts mall titans Simon Property Group Inc and Brookfield Property Partners LP as among its largest unsecured creditors, with “each being owed more than $3 million in rent payments,” per Reuters.

April 2021 – Collected Group

Collected Group, which owns the Joie, Current/Elliott and Equipment brands filed for Chapter 11 bankruptcy on April 5 in a Delaware Bankruptcy Court, in order “to cement a rescue plan backed by the private-equity firm that controls it, KKR & Co,” the Wall Street Journal reported, after attempts to find a buyer for the brands “stalled in the spring of 2020.” Together, KKR and fellow secured lender Callodine Commercial Finance LLC are owed upwards of $185 million, while “landlords and other unsecured creditors are owed an estimated $35.5 million.”

March 2021 – Ralph & Russo

London-based high fashion brand Ralph & Russo announced that it has entered into administration. In a statement on March 17, the brand asserted that “the decision to appoint administrators has been taken by the Board in order to assist in the restructuring of the business after the retail economy across the world has been badly hit by the financial downturn caused by the COVID-19 pandemic. The aim is to restructure the company to ensure its ongoing success.” The 11-year old company further stated that “Paul Appleton of Begbies Traynor Group plc and Andrew Andronikou of Quantuma Advisory Limited have been appointed as Joint Administrators and will now investigate all possible options to secure the future of this globally celebrated brand for the benefit of all Stakeholders.”

February 2021 – Belk Inc.

Belk Inc. filed for bankruptcy protection on February 23. The Sycamore Partners-owned department store chain filed for Chapter 11 protection in furtherance of a speedy “restructuring strategy that creditors have already voted unanimously to support,” the WSJ reported. If approved by the U.S. Bankruptcy Court in Houston, the Journal notes that the company’s Chapter 11 proposal, which was announced last month, will “trim $450 million in debt from the company’s balance sheet and provide a $225 million capital infusion, supplied by Belk lenders and its private-equity owner Sycamore.”

February 2021 – Solstice Marketing Concepts

Sunglasses chain Solstice Marketing Concepts LLC filed for bankruptcy on February 17 in U.S. Bankruptcy Court for the Southern District of New York, saying that it “plans to reorganize and will seek financing upon the court’s approval to keep funding its ongoing operations,” according to the Wall Street Journal. The second-largest retailer of sunglasses in the U.S., Solstice revealed that its brick-and-mortar stores took a significant hit amid COVID-19, with sales in 2020 down by 50 percent on a year-over-year basis.

“We are optimistic about reorganization as we continue to see increasing business in our stores as COVID restrictions are lifted and in the new fashions that our vendors are providing. We are now dedicating ourselves to the necessary changes to our business and the restructure of our obligations for the benefit of our employees, critical suppliers and other stakeholders,” Solstice’s CEO Mikey Rosenberg said in a statement.

January 2021 – L’Occitane, Inc.

The American arm of French beauty products company L’Occitane filed for bankruptcy in Delaware Bankruptcy Court on January 26, with the company’s regional managing director Yann Tanini stating that COVID has caused the company to “more aggressively address the rapidly widening gulf between its brick-and-mortar retail revenue and its substantial lease obligations, which no longer reflect the market.” As reported by the WSJ, the company’s U.S. subsidiary is “behind on $15 million in rent and seeking to shed lease obligations after the Covid-19 pandemic cut into sales.”

FY 2020

December 2020 – Francesca’s

Francesca’s voluntarily filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Delaware on December 3. The women’s fashion chain revealed plans to sell the business, including its brick-and-mortar stores, although it stated that it still plans close about 140 of its 700 stores, as previously announced in September. According to USA Today, “The company said it was obtaining $25 million in financing from its existing lender, Tiger Finance, to facilitate the sales process, subject to court approval,” which will allow the company to address lease obligations and “seek a new investor that can see Francesca’s into the future.” 

The company says it has lined up a “stalking horse” bid, and has a letter of intent from TerraMar Capital LLC, an investment firm that provides debt and equity capital to middle-market businesses.

November 2020 – Arcadia Group

Arcadia Group went into administration on November 30, the British equivalent of Chapter 11 bankruptcy. The retail group, which owns Topshop, Miss Selfridge and Dorothy Perkins, among other brands, said that the pandemic has “severely impacted” sales across its brands, most of which maintain expansive real estate footprints. At the same time, the AP noted on Monday that competition faced by the 18-year-old, London-headquartered group has increased in the form of “low-cost rivals like Primark, as well as from online disrupters such as ASOS and Boohoo,” and that 68-year-old chairman Phillip Green has “not invested enough in the businesses to get them in shape to deal with the new competition in retail.”

“We will now work with the existing management team and broader stakeholders to assess all options available for the future of the group’s businesses,” Matt Smith, joint administrator at Deloitte, said in a statement.

November 2020 – Furla USA

Furla SpA has filed for bankruptcy “due to the impact of the Covid-19 pandemic on its brick-and-mortar and wholesale businesses,” the Wall Street Journal reported. The American arm of the Italian company filed for chapter 11 protection in the U.S. Bankruptcy Court in New York on November 6, “planning to use the process to get rid of leases and debt, while focusing on a reorganization strategy of investing in e-commerce and wholesale.” Furla’s “goods are luxury products, they generally are seen as discretionary purchases, and consumer discretionary purchases have decreased due to sudden economic decline post-Covid-19,” Elena Moncigoli, CEO of Furla USA, said in a court declaration.

September 2020 – Century 21

Discount retailer Century 21 filed for bankruptcy in U.S. Bankruptcy Court in New York, “blaming the bankruptcy filing on its insurance providers’ decision to not pay about $175 million it said it should have received under policies to protect against business disruptions amid the coronavirus pandemic,” per the WSJ. The New York-based company revealed that it will close all of its 13 brick-and-mortar stores and will liquidate its assets.

“While insurance money helped us to rebuild after suffering the devastating impact of 9/11, we now have no viable alternative but to begin the closure of our beloved family business because our insurers, to whom we have paid significant premiums every year for protection against unforeseen circumstances like we are experiencing today, have turned their backs on us at this most critical time,” the retailer’s co-CEO, Raymond Gindi, said in a statement on September 10.

August 2020 – Stein Mart

Off-price retailer Stein Mart filed for Chapter 11 bankruptcy protection in a bankruptcy court in Jacksonville, Florida on August 12. The 100-year old Jacksonville, Florida-based retailer cited $197.8 million in debt as of the end of the first quarter ended May 2, per Reuters, while posting a loss of $65.7 million in the quarter, and revenue that had dropped by more than 50 percent. The company says that it plans to close most or all its 280 stores, and is evaluating strategic alternatives, including the potential sale of its e-commerce business and related intellectual property.

In a statement, Stein Mart CEO Hunt Hawkins said, “The combined effects of a challenging retail environment coupled with the impact of the COVID-19 pandemic have caused significant financial distress on our business.”

August 2020 – Lord & Taylor, Le Tote

Lord & Taylor, one of the oldest departments stores in the U.S., filed for bankruptcy protection in the Eastern Court of Virginia on August 2. The nearly 200-year old department store chain’s owner, fashion rental start-up Le Tote Inc., filed for Chapter 11, as well. Le Tote acquired Lord & Taylor from Saks Fifth Avenue owner Hudson’s Bay Co. for $71 million last year, “taking over its 38 locations and hoping to propel the venerable department store toward new, younger shoppers,” per NPR. Le Tote revealed in a court filing that its companies reported revenue of about $253.5 million in 2019.

August 2020 – Tailored Brands

Tailored Brands filed for Chapter 11 on August 2 in the Southern District of Texas. The company said it will continue to operate Men’s Wearhouse and Jos. A. Banks stores, along with K&G Fashion Superstore and Moores Clothing for Men, during the reorganization. It said in a release that a restructuring plan is expected to reduce the company’s funded debt by at least $630 million and provide increased financial flexibility.

July 2020 – Ascena Retail Group

Ascent Retail Group, which owns the Ann Taylor, Justice, Lou & Grey and Lane Bryant fashion brands, filed a Chapter 11 bankruptcy petition with the United States Bankruptcy Court for the Eastern District of Virginia, stating that it will permanently close nearly all of its Justice stores, as well a number of Ann Taylor, Loft, Lane Bryant and Lou & Grey outposts. In furtherance of a restructuring support agreement, the group said in a statement that it expects to “significantly reduce [its] debt by approximately $1 billion and provide increased financial flexibility to enable the Company to continue its focus on generating profitable growth and driving value for customers and stakeholders.”

Reflecting on the bankruptcy filing, CNBC reports that “with thousands of bricks-and-mortar stores, at its heyday, Ascena was once the biggest clothing retailer for women in the country, having amassed a portfolio of well-known brands for various sizes and age groups. But changing tastes in fashion and new platforms such as Rent the Runway and Stitch Fix have taken a toll on its business over the years. Already in a slump, the Covid-19 crisis pushed it over the edge.”

July 2020 – RTW Retailwinds

New York & Co. owner RTW Retailwindb announced on July 13 that it had filed for Chapter 11 bankruptcy with plans to permanently close most, if not all, of its 400 domestic brick-and-mortar outposts. As reported by CNBC, the company said that it is “evaluating potentially selling its e-commerce operations and related intellectual property in bankruptcy proceedings.”

“The combined effects of a challenging retail environment coupled with the impact of the Coronavirus pandemic have caused significant financial distress on our business, and we expect it to continue to do so in the future,” RTW Retailwinds CEO and CFO Sheamus Toal said in a statement. 

July 2020 – Brooks Brothers

202-year old retailer Brooks Brothers filed for bankruptcy in a Delaware court on July 8. The staple American company, which is owned by Italian businessman Claudio Del Vecchio, “was facing challenges before the health crisis forced nonessential retailers to temporarily close their stores.,” according to the Wall Street Journal, as “U.S. corporations had turned increasingly casual, and fewer men were buying suits,” which was heightened “once people started sheltering at home, they turned to even more casual attire such as sweatpants.”

In addition to being burdened by rent payments for its 250 North America stores, the COVID-19 pandemic put a strain on the brand’s existing search for a buyer, a process that began in 2019.

July 2020 – G Star Raw

On the heels of entering into voluntary administration in Australia in May, fashion brand G-Star Raw has filed for bankruptcy in the U.S. According to Sourcing Journal, the Los Angeles-based retail company filed for Chapter 11 bankruptcy on Friday, citing financial woes from the coronavirus crisis.

July 2020 – Lucky Brand Dungarees

Denim-maker Lucky Brand filed for Chapter 11 bankruptcy protection, with the brand revealing that it has entered into “a stalking horse asset purchase agreement with [Authentic Brands Group’s] SPARC Group LLC,” the operator of Aéropostale and Nautica, according to a release on July 3. “To facilitate the sale and reduce its debt burden caused by recent challenges, including the COVID-19 pandemic, Lucky Brand has initiated proceedings under Chapter 11 of the U.S. Bankruptcy Code in the District of Delaware.”

Lucky Brand CEO and Matthew A. Kaness said in a statement, “The COVID-19 pandemic has severely impacted sales across all channels. While we are optimistic about the reopening of stores and our customers’ return, the business has yet to recover fully. We have made many difficult decisions to preserve the Company’s viability during these unprecedented times. After considering all options, the Board has determined that a Chapter 11 filing is the best course of action to optimize the operations and secure the brand’s long-term success.”

May 2020 – DVF Studio U.K.

Designer Diane Von Furstenberg’s British business has entered into administration (the British equivalent to U.S. Chapter 11 bankruptcy proceedings), citing mounting losses and “substantial doubt” as to the status of its subsidiary. While the American operations of the nearly 50-year old fashion brand remain in tact, finance director Andrew Stoke told the Sunday Times that DVF was “resetting its business model” in the United Kingdom as a result of the pandemic.

May 2020 – Lulu Guinness

British fashion and accessories brand filed for bankruptcy in England, according to WWD, the 31-year old, London-based brand was expected to receive a year’s worth of funding, but when the COVID-19 virus hit, the funding fell through, prompting the company to seek bankruptcy protection. Almost immediately after the filing, “a group of existing shareholders, including Guinness, herself, repurchased the assets with plans to push ahead.”

“We were in a great place before COVID hit, a much leaner and more efficient company,” chairman James McArthur said of the brand, which generated $12.22 million in revenue for the fiscal year ending March 31, 2019, with losses of more than $632,000. “But without that funding, we couldn’t move forward. Now, we’re ready to power forward.”

May 2020 – J.C. Penney

J.C. Penney Co. filed for bankruptcy protection on May 15, revealing plans to permanently close some stores and explore a potential sale. According to Reuters, the 107-year old U.S. department store chain, which is “known for selling family apparel, cosmetics and jewelry at some 850 locations across the U.S., said it reached an agreement with existing lenders for $900 million of debtor-in-possession financing to aid operations while it navigates bankruptcy proceedings in federal court in Corpus Christi, Texas.” The retailer, which revealed in its filing that it has approximately $500 million in cash on hand, said it has commitments for $900 million in financing from its existing first lien lenders to fund bankruptcy.

The company’s CEO Jill Soltau said in a statement in connection with the filing, “The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country. As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company.”

May 2020 – Neiman Marcus Group

On the heels of reports that a filing was coming, Neiman Marcus Group filed for Chapter 11 bankruptcy on May 7. Neiman Marcus Group was pin-pointed as likely to resort to Chapter 11 protection given that “the debt-laden Dallas-based company has been left with few options after the pandemic forced it to temporarily shut all 43 of its Neiman Marcus locations, roughly two dozen Last Call stores and its two Bergdorf Goodman stores in New York,” according to CNBC.

In connection with Thursday’s filing in a U.S. Bankruptcy Court in Houston, Texas, Neiman Marcus says that it is aiming to eliminate $4 billion of its more-than-$5 billion in debt. The retailer revealed that it has obtained support from “a significant majority of its creditors to undergo a financial restructuring, substantially reducing its debt load and interest payments and supporting continued operations during the COVID-19 pandemic and beyond.”

May 2020 – ALDO Group

Canadian footwear and accessory retailer ALDO Group Inc. said on May 7 that it has filed for protection from creditors in Canada and the U.S. with plans to restructure and stabilize its business. The Montreal-based company said it filed for protection under the Companies’ Creditors Arrangement Act, which the Wall Street Journal likens to the U.S. Bankruptcy Code’s Chapter 11 (although Aldo claims it is more akin to Chapter 15), and that it has voluntarily applied for similar protection in the U.S. and is about to do so in Switzerland. The company says it “will work to complete its restructuring in a timely fashion and hopes to exit from the process as soon as possible and better positioned for long term growth.”

CEO David Bensadoun said: “ALDO is one of the world’s leading fashion footwear and accessory brands with a solid track record of growth and profitability for almost half a century. It is no secret that the retail industry has experienced rapid and significant change over the last several years. We were making strong progress with the transformation of our business to tackle these challenges; however, the impact of the COVID-19 pandemic has put too much pressure on our business and our cash flows. After conducting an exhaustive review of strategic alternatives, we determined that filing is in ALDO’s best interest to preserve the Company for the long term and survive through this challenging period.”

May 2020 – John Varvatos

New York-headquartered fashion company John Varvatos announced on May 6 that it has reached agreements with an affiliate of Lion Capital LLP, an existing investor, under which the company will sell its business to Lion “in order to ensure the business’s long-term success.” To facilitate this transaction, John Varvatos Enterprises and certain of its affiliates filed voluntary petitions for Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware.

The brand, which lists assets of as much as $50 million and liabilities of at least $100 million, stated that the sale to the Lion Capital affiliate “will be subject to approval of the bankruptcy court and may include a court-supervised auction in which other bidders may offer a higher price for the company’s assets.” However, “Lion remains confident in the long-term potential of the company’s business to be operated as a going concern in the future and has additionally committed to provide, subject to court approval, debtor-in-possession financing, which, when combined with the company’s projected cash flows, is expected to support its operations during the restructuring process.”

May 2020 – J.Hilburn

Custom menswear brand J.Hilburn filed for Chapter 11 bankruptcy with a U.S. Bankruptcy Court in Dallas, listing assets of less than $10 million, and liabilities that top $10 million, with more than half of that debt due to its suppliers.  The 13-year old company, which was founded by former equity research analyst Hil Davis and M&A analyst Veeral Rathod, attracted venture investment, as much as $13.8 million in 2012, after raising $12.25 million in rounds between 2008 and 2011, the majority of which came from Boston-based Battery Ventures.

In a statement this week, the company’s CEO David DeFeo said, “J.Hilburn has a loyal client base. We believe in our stylists, in the growth potential of the men’s custom market, and in the ability of our management team to lead the company to future success.” 

May 2020 – J. Crew

On the heels of reports that J. Crew would be one of the first major retail bankruptcies of the COVID-19 crisis, the New York-headquartered apparel company filed for Chapter 11 bankruptcy protection with a bankruptcy court in the Eastern District of Virginia. The company cited assets and liabilities at between $1 billion and $10 billion, and revealed that it had reached a deal with its lenders to convert about $1.65 billion of debt into equity. “We will continue all day-to-day operations,” according to J.Crew Group CEO Jan Singer.

NOW: As of September 10, 2020, J. Crew had emerged from bankruptcy. Per MarketWatch, “J.Crew has swapped $1.6 billion in debt with Anchorage Capital Group LLC, which is now the majority owner of the company. J.Crew has a $400 million exit term loan from Anchorage, GSO Capital Partners LP and others due 2027, and a $400 million asset-based lending credit facility due 2025 from Bank of America NA. Ahead of the bankruptcy filing, J.Crew had filed to take the Madewell brand public.”

April 2020 – True Religion (Round 2)

After filing to Chapter 11 bankruptcy back in July 2017, listing assets and liabilities in the range of $100 million to $500 million, True Religion filed for a second time this month, citing the same level of assets and debts in its April 13 court filing, and asserting that although it wanted to wait out the COVID-19 crisis, it  “simply could not afford to do so.” In the near term, and “until our stores open up, we will be continuing as we have, to run our e-commerce businesses, in the same way we did prior to filing for Chapter 11,” CEO Michael Buckley said in a statement. 

The California-based denim-maker, which saw its heyday in the mid-to-late 2000s, exited from bankruptcy in 2017 “in a matter of four months, after shedding over $350 million in debt, closing stores and investing in e-commerce,” per Forbes, which noted that the company’s jeans “have fallen out of favor in recent years amidst increased competition from lower-cost brands like Levi Strauss and Madewell, as well as a boom in athleisure.” 

FY 2019

September 2019 – Forever 21

After months of growing speculation, fast fashion brand Forever 21 filed for Chapter 11 bankruptcy protection on September 29. The 35-year old retailer – which helped pioneer the early wave of fast fashion, bringing trendy, runway-inspired garments and accessories to consumers for cheap – said “the restructuring will allow it to focus on the profitable core part of its operations,” while closing to 178 of its 800 existing outposts, including some across the U.S. and most of its stores in Asia and Europe.

August 2019 – Barneys New York

In light of increasing speculation, upscale department store Barneys filed for Chapter 11 bankruptcy on August 6 in the U.S. Bankruptcy Court for the Southern District of New York, “and put itself up for sale after facing soaring rents and failing in its earlier attempts to find a buyer for the cash-strapped retailer,” per Reuters. The New York-headquartered fashion department store “secured $75 million in new financing from affiliates of Hilco Global and the Gordon Brothers Group to help it keep operating as it navigates the bankruptcy court,” but says it will shutter 15 of its current locations, including those in Chicago, Las Vegas and Seattle, “along with five smaller concept stores and seven Barneys Warehouse locations.” Barneys listed assets and liabilities in the range of $100 million to $500 million.

According to CNBC, This is “the second time that Barneys has landed in bankruptcy court. Its first filing came in 1996, after a squabble with its Japanese owner, department store company Isetan. The filing was in part a move to renegotiate its deal with Isetan, as well as cope with what it viewed as excessive rent.”

July 2019 – Sonia Rykiel

Sonia Rykiel has been forced into liquidation, following a decision from a Paris commercial court. Despite a string of extended deadlines during which time the court received bids for the fashion brand, whose eponymous founder died in 2017, came up short after entering into receivership – the French equivalent of Chapter 11 bankruptcy protection in the U.S. – this spring. In April, First Heritage Brands, Sonia Rykiel’s parent company, sought court protection against creditors during its search for new ownership, which ultimately never came into fruition.

Without a buyer, as the court rejected a single unnamed bidder, and following a layoffs and store closures earlier this year, including in the U.S., the brand will now liquidate its existing operations entirely.

April 2019 – Roberto Cavalli

Roberto Cavalli filed for Chapter 7 bankruptcy protection in a New York court to protect the fashion brand from more than 200 outstanding creditors as it liquidates its U.S. arm. According to its filing, which is dated April 4, 2019, Cavalli states, “Due to severe liquidity constraints, the company is unable to pay its debts, including ordinary operating expenses, as they come due.” The American arm of the Italian design house closed all U.S. stores and is preparing to liquidate its North American operations, while its European activities are slated to continue as usual.

NOW: An Italian court court approved the sale of troubled Italian group Roberto Cavalli to real estate developer Damac in July 2019. Dubai-based Damac has acquired 100 percent of Roberto Cavalli SpA. for an undisclosed amount.

March 2019 – Pretty Green

Pretty Green, the fashion retailer founded by the former Oasis frontman Liam Gallagher, has been placed into administration. According to the Guardian, reps for the brand say they hope to find a buyer to save the business, which was founded by Gallagher in 2009. Pretty Green, which has 12 standalone stores, 40 concessions and a wholesale business, ” will continue trading until further notice.”

March 2019 – Diesel

The American arm of Italian fashion brand Diesel filed for Chapter 11 bankruptcy protection from creditors. Its privately-held Breganze-based parent company, which was founded by Adriano Goldschmied and Renzo Rosso in 1978, is not part of the filing. Diesel USA’s Chief Restructuring Officer Mark Samson told Reuters that “Diesel USA has no plans to close, but intends to exit some of its 28 stores.” Moreover, he said the company’s three-year business plan contemplates focusing on more profitable stores, improving its product lines and working with social media “influencers” to attract Millennials, “Generation Z” and other new customers.

February 2019 – Payless, Inc. (Round 2)

After first filing for bankruptcy in April 2017, Payless filed for Chapter 11 protection again, and revealed that it would shutter its domestic business. “Payless had too much debt, too many stores, and too much corporate overhead when it emerged from the earlier bankruptcy,” according to Stephen Marotta, who was named as the company’s chief restructuring officer to prepare for the bankruptcy, according to CNN.

NOW: All of Payless’ stores in the U.S. and Canada and its e-commerce site were closed by June 2019. Its nearly 800 stores outside of the U.S., including in Latin America, remain in operation.

February 2019 – Charlotte Russe

Charlotte Russe filed for Chapter 11 bankruptcy protection over the weekend and revealed plans to close almost 100 stores in malls across the country. The teenage-focused apparel company, which was founded in 1975 in San Diego, California, said it will use the bankruptcy proceedings to sell its certain assets and that it’s received a commitment of $50 million in financing, according to a press release Monday.

FY 2018

November 2018 – David’s Bridal

David’s Bridal Inc. has filed for Chapter 11 bankruptcyin U.S. Bankruptcy Court in Delaware, citing $500 million in debut, compared to its $100 million-plus in assets. According to Bloomberg, “The court-supervised restructuring allows the business to keep operating, and thus avoid the calamitous and sometimes tearful impact on brides that often accompanies the collapse of wedding retailers.”

NOW: As of mid-January 2019, the bridal retailer announced that it had emerged from Chapter 11 bankruptcy and is poised for long-term growth. The Pennsylvania-based company confirmed that it has successfully completed its financial restructuring without closing any of its 300 stores. According to Chron.com, “The company said it planned to lure back customers by offering more affordable dresses in a wider assortment of sizes, both in-store and online. The retailer also said it would host special events with top wedding experts at its stores nationwide to help brides plan their weddings.”

June 2018 – J. Mendel

New York-based brand J.Mendel, which has been in and out of court over the past year battling over outstanding bills, filed for Chapter 11 protection in U.S. bankruptcy court in New York. “Restructuring the company’s debts will allow J.Mendel to face the current challenging luxury retail environment, and I am confident that this will allow the company to move forward with renewed financial stability, allowing us to focus on crafting the best designs for our devoted clientele,” said John Georgiades of Stallion Inc., J.Mendel’s controlling investor.

May 2018 – Carven

Carven and its parent company, Société Béranger, have filed a voluntary petition with the Commercial Court in Paris in a preceding that mirrors Chapter 11 bankruptcy, in order to remain in business, while the fashion brand reorganizes and establishes a plan to pay off its creditors. As a result of its filing in French court, Carven has been “put into receivership,” a legal proceeding in which companies are placed into the responsibility of a legally-appointed individual, who acts as custodian of its assets and/or business operations. Carven is looking for a buyer.

May 2018 – Rockport Group

Footwear group Rockport has filed for Chapter 11 protection. Newton, Massachusetts-based Rockport Group will sell its assets to private equity group Charlesbank under a bankruptcy plan as the shoemaker struggles to compete in a tougher retail market. With brands that include Aravon, Dunham and Rockport, the group says it will maintain operations through the sale process to stalking horse bidder Charlesbank. Rockport was founded in 1971 as The Rockport Co. and eventually became part of Adidas before being sold again.

April 2018 – Nine West

U.S. footwear and apparel company Nine West Holdings Inc filed for bankruptcy and said it will sell its Nine West and Bandolino footwear and handbag business to Authentic Brands Group. Nine West, which owns brands such as Anne Klein and Gloria Vanderbilt, said it had received $300 million in debtor-in-possession financing and had entered a restructuring agreement.

Update (June 11, 2018): Authentic Brands Group LLC, which owns Juicy Couture, Judith Leiber, Herve Leger, and Nautical, among other brands, has reportedly won the auction for the intellectual property of bankrupt U.S. shoe and accessories company Nine West Holdings Inc with a revised bid of about $350 million.

March 2018 – Claire’s Stores

Claire’s Stores Inc. filed its long-awaited Chapter 11 petition for bankruptcy court protection. The classic mall store, which says it has pierced more than 100 million ears around the world, reached a restructuring agreement with its creditors. In a Chapter 11 bankruptcy filing on Monday, Claire’s said it will reduce its debt by $1.9 billion. It held $2.1 billion in debt at the end of 2017.

February 2018 – Charlotte Olympia

Accessories brand Charlotte Olympia has filed for Chapter 11 bankruptcy protection in Delaware bankruptcy court. Founded in 2007 by Charlotte Olympia Dellal, the brand has “an estimated the value of their assets at $3.26 million, dwarfed by liabilities of $19.2 million,” per Footwear News. In a declaration filed with the courts, chief restructuring officer William Kaye said Charlotte Olympia’s U.S. outposts — consisting of four locations in New York, California, and Nevada — had historically been unprofitable. Through bankruptcy, the brand plans to liquidate inventory and close all stores.

FY 2017

December 2017 – Charming Charlie

Fashion jewelry chain Charming Charlie filed for Chapter 11 bankruptcy and entered into a restructuring agreement with lenders and equity sponsors. The retailer said it had secured $20 million in debtor-in-possession financing from a majority of its existing term loan lenders and entered into a $35 million asset backed loan with current lenders.

November 2017 – Styles for Less

Styles for Less filed for Chapter 11 bankruptcy, hoping to avoid the rapidly expanding graveyard of mall retailers as the internet wreaks havoc. The company, known to many of its fans as Styles, filed for court protection from its creditors in the U.S. Bankruptcy Court Central District of California. Anaheim, Calif.-based Styles cited a range of $10 million to $50 million in assets and the same range of liabilities.

September 2017 – Aerosoles

Women’s shoe retailer Aerosoles Group has confirmed that it filed for Chapter 11 bankruptcy protection, listing assets of $10 million to $50 million and liabilities of $100 million to $500 million. Aerosoles’ holding company AGI HoldCo Inc said it would continue to manage its stores and operate its businesses as “debtors in possession” and will significantly reduce the number of stores as part of the restructuring in an effort to realign the business with the changing marketplace environment.

August 2017 – Perfumania

Mall-based retailer chain Perfumania Holdings Inc. has sought chapter 11 protection with plans to reorganize around its better-performing stores. “Unlike many retailers who have filed for bankruptcy, Perfumania sees a viable path forward,” Chief Executive Michael Katz said in court papers filed Saturday.

July 2017 – Alfred Angelo

The major bridal dress chain abruptly closed an array of its stores in July leaving brides and bridesmaids dress-less, panicked, and in limbo. Alfred Angelo – a Florida-based company that stocks at nearly 1,400 boutiques across the U.S. and internationally, including self-owned and operates stores in Los Angeles, New York, Chicago, Miami, and D.C. – has since confirmed the store closures and that it has filed for bankruptcy protection.

July 2017 – True Religion

U.S. denim retailer True Religion Apparel confirmed that it has filed for bankruptcy protection and signed a restructuring agreement with a majority of its lenders. True Religion, a company whose denims have gradually fallen out of style, filed for creditor protection under Chapter 11 in the U.S. bankruptcy court in the District of Delaware, and listed assets and liabilities in the range of $100 million to $500 million.

June 2017 – Papaya Clothing

Teen apparel seller Papaya Clothing has filed for Chapter 11 bankruptcy protection. The privately held California-based company, which maintains a network of 80 brick-and-mortar stores and about 1,300 employees, said in its filing that its financial difficulties came from competition from e-commerce and a poorly timed expansion, according to the Wall Street Journal. Opening its first store in 1999, Papaya added about 50 new stores in the last six years. The expansion took “a heavy financial toll” and significantly increased operating expenses, court papers stated.

May 2017 –  Rue21

U.S. teen fashion retailer Rue21 Inc filed for Chapter 11 protection on Monday in the Western District of Pennsylvania bankruptcy court.The retail chain, which sells budget-priced clothing and accessories at over 1,100 stores across the United States, listed assets and liabilities in the range of $1 billion and $10 billion, according to the court filing.

April 2017 – Jaeger

British brand Jaeger has gone into administration, following confirmation from the brand it filed a notice of intention to appoint administrators. According to the BBC, Jaeger, which was founded in 1884 and has counted actresses and Kate Middleton among its fans, has struggled to keep up with rivals, such as Burberry, or see off competition from fast-fashion chains including Zara and H&M.

April 2017 – Payless, Inc

Payless filed for Chapter 11 bankruptcy in St. Louis, listing liabilities of $1 billion to $10 billion and citing a plan to immediately close about 400 underperforming stores in the U.S. and Puerto Rico. “This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify,” Chief Executive Officer W. Paul Jones said in a statement.

March 2017 – BCBG Max Azria

BCBG, a venerated contemporary brand, which has been a major force in the Los Angeles fashion industry for nearly 30 years, filed for bankruptcy in a third attempt in two years to rescue the business hit hard by changing consumer habits. According to its bankruptcy filing, BCBG is rejecting a number of store leases and closing 120 unprofitable stores that racked up $10 million in losses during fiscal 2016. These stores made up 63 percent of BCBG’s total losses from retail locations with negative contribution margins, the company said in U.S. Bankruptcy Court filings in New York.

Some lenders have agreed to loan the company $45 million to help it get through bankruptcy. That loan must be approved by the judge in the case. BCBG owes lenders about $459 million.

February 2017 – Wet Seal (Round 2)

Wet Seal filed for bankruptcy protection in early February, following reports that the struggling teen apparel retailer had closed all its stores after it was unable to find a buyer. It has since asked the Delaware bankruptcy court to approve an auction for its intellectual property, including its name and assets connected to its website.

January 2017 – The Limited

The Limited filed for Chapter 11 bankruptcy in January. Parent company Limited Stores LLC has agreed to a “stalking horse” bid for its intellectual property and some related assets from an affiliate of private equity firm Sycamore Partners. The company announced that all 250 brick-and-mortar stores will be closed.

NOW: After shuttering its brick-and-mortar stores, the company has also “temporarily closed” its website, writing, “Please know that it has been such an honor to provide fashion for you and other strong, confident women for more than 50 years.” In addition, the retailer noted that all orders not already shipped have been canceled.

January 2017 – Bibhu Mohapatra

The New York City-based designer, Bibhu Mohaptra, filed for bankruptcy in early 2017, telling the Wall Street Journal that he plans to continue operations and he feels the debt restructuring will make his company more attractive to investors. Mohapatra also said the restructuring will allow him to start a more affordable second collection.

FY 2016

December 2016 – Yogasmoga

New York-based athletic apparel firm Yogasmoga filed for Chapter 11 in a bankruptcy court in Manhattan, following an involuntary Chapter 7 bankruptcy in November. Despite its pure-digital start, Yogasmoga soon took its yoga clothing to two brick-and-mortar stores in 2015, upping up its physical network in ten shops during the past twelve months. Many stress that the founders’ liking for expensive artisan fabrics and costly photography, together with its rapid expansion set the project to fail.

NOW: The yoga company has closed all of its stores except one, which is located in San Diego. “The brand and product is still connecting very strongly with the consumer, so we are shrinking our footprint to online and taking Yogasmoga forward with a smaller footprint online and through the La Jolla store,” the company’s founder, Rishi Bali, said in an email.

November 2016 – American Apparel (Round 2)

American Apparel filed for its second bankruptcy protection in just over a year in November 2016, weighed down by intense competitive pressures facing U.S. teen retailers and a rocky relationship with its founder. The second bankruptcy came as the retailer struggles to overcome years of losses and rising online competition.

NOW: Canadian apparel maker Gildan Activewear won a bankruptcy auction to buy American Apparel’s manufacturing equipment and intellectual property rights for $88 million in cash. The Canadian company beat out other reportedly interested parties, such as Forever 21 and Amazon. American Apparel stores are currently offering steep discounts to clear out leftover merchandise, and all 110 will shutter.

November 2016 – Nasty Gal

Nasty Gal has had a rough couple of years: It cut jobs in both 2015 and 2016, and founder Sophia Amoruso ceded the role of CEO at the beginning of 2016. The company had also been on the receiving end of an array of lawsuits in recent years, both from former employees, who have all cited various forms of discrimination, and intellectual property rights holders, including jewelry designer Pamela Love, who filed a copyright infringement suit against Nasty Gal in summer 2016.

In November, Nasty Gal’s lender, Hercules Technology Growth Capital Inc, a Palo Alto-based lender to venture-backed firms, rejected additional proposals from the brand, which requested a loan just two days into its bankruptcy filing. The brand, instead, filed for Chapter 11.

NOW: Online retailer Boohoo.com purchased Nasty Gal for $20 million as a stalking horse bidder. Per WWD, “they did not include the company’s two Los Angeles area store leases.”

May 2016 – Aeropostale

Aero, like other moderately priced brands, was rocked by the fast fashion stars like H&M, Zara and Forever 21 responding to fashion trends at warp speed, with very cheap price tags to boot, leaving older brands in the dust.  Aeropostale filed for Chapter 11 and planned to close more than 100 stores. This came shortly after shares in the company were delisted by the New York stock Exchange in April.

NOW: The mall brand exited Chapter 11 in September 2016 – with only 229 stores, as opposed the approximately 800 they previously boasted. They are now owned in part by mall operators Simon Property Group and General Growth Properties, who jointly bid $243 million.

April 2016 – Pacific Sunwear

Once a staple merchant of California cool, PacSun wasn’t able to adapt as fashion trends left surfwear behind and over-expansion sapped its resources. It amassed crippling debt as it recorded losses each year since 2008. Every effort at reinvention failed, and the company filed for bankruptcy, as the company’s shares were down 96 percent over the previous 12 months.

NOW: PacSun restructured and emerged from bankruptcy in September, under new ownership of Golden Gate Capital. The brand has seen a boost in online sales.

January 2016 – Joyce Leslie

Under pressure from a fiercely competitive market and the rise of e-commerce, New Jersey-based women’s apparel retailer Joyce Leslie Inc. began looking for a buyer to stave off liquidation, having filed for Chapter 11 bankruptcy after a sharp decline in revenue.

NOW: Unable to find a buyer after 30 days, Joyce Leslie closed all stores in February last year. CEO Celia Clancy said in a statement, “Unfortunately, our efforts to find a strategic partner to help save the business were not successful. We are saddened to say that we now have to close our doors after 65 years.”

FY 2015

December 2015 – Tamara Mellon

The 48-year-old launched her eponymous accessories label in 2013 after co-founding luxury shoe label Jimmy Choo. Her designs were stocked at Net-a-Porter.com and included ready-to-wear pieces as well as shoes and handbags. She filed for Chapter 11 in December 2015.

NOW: Tamara Mellon relaunched her brand in Los Angeles in mid-2016, selling shoes and handbags exclusively on her own site.

October 2015 – American Apparel (Round 1)

American Apparel filed for its first round of bankruptcy in the fall of 2015, after announcing in August that it might not have enough capital to sustain operations for 12 months.  The Los Angeles-based company, which confirmed that it had not made a profit since 2009, joined a growing number of U.S. retailers selling to teens and young adults that have been unable to adjust to changing spending patterns and intensifying competition. The company said its stores and manufacturing operations would continue to operate normally under a restructuring deal reached with most secured lenders.

NOW: See above.

September 2015 – Quiksilver

Shares in Quiksilver plunged almost 80 percent in 2015 as the company wrestled with both shipping and accounting issues, and then filed for bankruptcy. It was forced to delay its first-quarter earnings report in March due to a “revenue cut-off issue,” and CEO Andy Mooney left the company that same month.

NOW: Quiksilver was revived thanks to a $50 million investment by Oaktree Capital Management LP. Most recently, Quiksilver partnered with New Schoolers to host a talent-seeking ski competition.

April 2015 –  Frederick’s of Hollywood

Known for its racy women’s lingerie, Frederick’s of Hollywood filed for bankruptcy after closing all its stores and reaching a deal to sell the company as an online-only venture to Authentic Brands Group LLC. The previous year, Frederick’s was taken private for about $24.8 million by investors led by a unit of New York-based Harbinger Group Inc. – at the time of the deal, Frederick’s had 94 women’s clothing stores; at its height it had more than 200.

NOW: Per the deal with Authentic Brands Group LLC, Frederick’s now operates exclusively online.

March 2015 – Karmaloop

Weighed down by millions in debt and by poor business ventures, the Boston streetwear company, Karmaloop Inc., filed for Chapter 11 bankruptcy in March 2015.

NOW: Although Kanye West and hip-hop entrepreneur Dame Dash expressed interest in buying a majority stake in the company, ultimately only West Palm Beach, FL-based Comvest Partners and Chicago-based CapX Partners bid to save the company.

February 2015 – Cache

The women’s clothing chain known for helping popularize Armani designs in the U.S. filed for bankruptcy as the sector struggled with growing competition and lower spending by teen shoppers. Cache listed assets of $10 million-$50 million and liabilities of $50 million-$100 million. The mall based retailer, which had 218 outlets, had not reported a profit in the previous nine quarters.

NOW: Cache ended all business operations and closed all stores. According to the brand’s site: “Under previous ownership, Cache went out of business and closed all stores. Next steps for preserving the well-known Cache brand are being explored under new ownership.”

January 2015 – Wet Seal (Round 1)

Wet Seal (like other similar chains) filed for bankruptcy at the end of 2015, hurt by stores like H&M and Forever 21 that woo young people with fast-changing selections of low-priced fashion.  Immediately prior, Wet Seal announced that it was closing about 338 stores, or two-thirds of its total. Private equity firm Versa acquired the Wet Seal brand in April 2015, announcing that it would maintain its headquarters and continue operating its 173 stores and growing its online platform.

NOW: See above.

FY 2014

December 2014 – Deb Stores  

The Philadelphia-based operator of Deb Shops filed for bankruptcy in December 2014, blaming a shortage of capital. “Deb’s recent performance has been strained due to a combination of factors, including historic lack of capital invested in business resulting in old, tired stores with unfavorable mall traffic trends and general weakness in the competitive juniors’ space,” Chief Executive Officer Dawn Robertson said in court papers.

NOW: Deb Stores has revamped itself into an e-commerce only business, selling exclusively on its own website.

December 2014 – dEliA*s

Delia’s was another clothing retailer that filed for bankruptcy in 2014, citing stagnating shopping-mall traffic and consumers looking to the Internet for bargains.

NOW: Delia’s has revamped itself into an e-commerce only business, selling exclusively on its own website.

July 2014 – Love Culture

Founded in 2007 by former Forever 21 executives Jai Rhee and Bennett Koo, Love Culture launched as a brand aimed at women in the 18-to-35 age range. The company had 82 brick-and-mortar stores stretching from Massachusetts to Hawaii at the time of filing for bankruptcy. In its filings, Love Culture said it “plans during the bankruptcy process to close money-losing stores, restructure its debt and investigate options ‘including a possible sale of substantially all of its assets as a going concern.’”

NOW: The company has since revamped as an online-only retailer.

March 2014 – Ashley Stewart

According to a statement from the company upon filing for bankruptcy, Ashley Stewart began suffering financially in 2012 due to a decline in revenue and profitability. While the company brought on “new senior management and refocused its merchandizing and e-commerce efforts,” it was forced to file for bankruptcy nonetheless.

NOW: The company maintains a network of brick-and-mortar stores throughout the U.S., and also sells online by way of its own e-commerce site.

FY 2013

December 2013 – Loehmann’s (Round 3)

Loehmann’s filed for its latest round of Chapter 11 bankruptcy protection in federal bankruptcy court, indicating its plans to sell its remaining assets in an auction subject to the court’s approval. Executives with the retail chain, which operated fleet of 39 stores at the time, estimated the company was carrying $100 million in debt, an amount either equal to or greater than the value of its assets.

NOW: According to Loehmann’s, the company “is back, and here to stay.” It operates exclusively online.

July 2013 – Nicole Farhi

Three years after Nicole Farhi and Steven Marks sold off the label they launched together (and one year after Farhi ceased all work for the brand), the company filed for bankruptcy in the UK. According to analyst Peter Saville, a partner at Zolfo Cooper, “As with many other fashion retailers, the decline in high street spend coupled with rising costs has led to increased financial pressures on the business.”

NOW: The brand – sans Ms. Farhi – maintains stores in London and sells through Harvey Nichols and its own e-commerce site.

FY 2012

August 2012 – Betsey Johnson

Betsey Johnson, who started her eponymous label in 1978, filed for bankruptcy after being “bogged down in five-year projections.” She further noted: “Or maybe it all began when stores started knocking off my $250 prom dresses for $49.” Johnson’s partner Steve Madden stated that the company “had delusions of building a huge company and going public. So they borrowed a lot of money, they had too many stores, and their rents were too high.”

Johnson filed for bankruptcy and closed all of her 63 stores after falling into millions of dollars into debt. In 2013, Johnson returned to New York Fashion Week to celebrate the launch of her new collection, intended to “hit department stores and retailers at affordable prices.”

NOW: Betsey Johnson currently maintains its own e-commerce site, where it sells garments, accessories, and home goods. It also sells via Macy’s, Dillard’s, and other similarly situated retailers.

April 2012 – Aquascutum

Troubled British clothing label Aquascutum – which was launched as a menswear brand in London in 1851 and family-owned until 1990, entered into administration. Following “challenging conditions in the UK,” the brand hoped for a turnaround in the company’s fortunes, but were derailed further by the fact Aquascutum’s royalty rights for the Asian market, a high growth area for luxury goods, have belonged to Hong Kong’s YGM Trading since 2009.

NOW: Aquascutum was acquired by a Chinese consortium in 2016 for $120 million. In 2015 the brand closed 14 of its stores in China amid declining sales, but opened one in Europe. In the UK, its three remaining standalone stores are in Westfield London, Great Marlborough Street and Jermyn Street.

FY 2010

November 2010 – Loehmann’s (Round 2)

Discount apparel retailer Loehmann’s sought bankruptcy protection after its Dubai government-linked owner failed to reach a debt-extension deal with creditors.

NOW: See above.

April 2010 – Rock & Republic

Rock & Republic filed for Chapter 11 bankruptcy in hopes that restructuring would enable the Los Angeles-based denim company to “ease pressures on its balance sheet.” The brand, which sold its wares at upscale stores such as Saks Fifth Avenue and Bloomingdale’s and collaborated with celebrities such as Victoria Beckham, cited assets between $50 million and $100 million and liabilities of $10 million to $50 million.

NOW: Under a long-term licensing agreement with VF Corp. – which bought Rock & Republic’s trademarks at a bankruptcy auction last March – VF is manufacturing Rock & Republic’s denim component, with Kohl’s design and sourcing teams responsible for the rest of the apparel categories. The line is now sold exclusively at American department store retailing chain, Kohl’s.

FY 2009

October 2009 – Yohji Yamamoto

Yohji Yamamoto’s label began to experience financial trouble when “fashion conscious Japanese women turned to cheaper casual clothes amid the economic slump. In contrast to high-end fashion houses like Yamamoto, demand for low-cost clothes was booming in Japan” during the first decade of the 2000’s. Saddled with a $76 million debt, Yamamoto filed for bankruptcy protection in Japan.

NOW: Yohji Yamamoto regularly shows during Paris Fashion Week, with stockists including FarFetch, Lyst, and FWRD, and brick-and-mortar stores worldwide.

August 2009 – Escada

Following a 70-million-euro loss for the 2007/2008 financial year, Escada reported further losses with Chief financial officer Markus Schuerholz stating in early 2008 that the company was in danger of insolvency. After an emergency stock swap plan intended to save the company from bankruptcy failed to find sufficient backing among investors, the company filed for bankruptcy.

NOW: The German label – under the creative direction of Daniel Wingate – recently released its Pre-Fall 2017 collection.

May 2009 – Christian Lacroix

Lacroix’s fashion house operated at a loss every year since it was founded in 1987 under the umbrella of luxury conglomerate LVMH Moët Hennessy Louis Vuitton. LVMH’s plan was to create a fashion house which would sell products from haute couture to handbags and perfume. But Lacroix never had a hit perfume or an “it” bag.

In 2005 LVMH sold the firm for a nominal sum to the Falic Group, owner of Duty Free Americas, a retail chain. Lacroix persuaded the Falic Group to take the brand further upmarket. The new owners closed two cheaper but profitable lines, Jeans and Bazar, and raised prices for ready-to-wear. Per Forbes, “after 22 years of bucking trends and ignoring the bottom line, Christian Lacroix filed for the equivalent of Chapter 11 bankruptcy protection in France.”

NOW: Lacroix, himself, is consulting and working as a costume designer for some of Europe’s top cultural institutions. The brand, which no longer stages runway shows or sells runway garments, sustains itself through the sale of Christian Lacroix branded home goods.

February 2009 – Gianfranco Ferré

The Italian design house filed for administration in early 2009 in what Italian Industry Minister Claudio Scajola called a move aimed “to safeguard the group and its ability to continue in business.” In 2002, Tonino Perna’s IT Holding purchased 90% of the company, while Ferré, himself, retained the position of artistic director until he died in 2007.

NOW: As of now, the brand appears to consist almost exclusively of licensed goods, such as fragrances, as well as its mid-market Ferre Milano collection of garments and accessories, which is sold on Yoox.

FY 2008

December 2008 – Bill Blass

Bill Blass Ltd. filed for Chapter 7 liquidation (the chapter of the Bankruptcy Code provides for “liquidation” – the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors), citing $192,000 in total assets with debts of $829,000. WWD reported at the time that NexCen – the owner of Bill Blass – was suffering so significantly that it planned to sell the furniture in the Bill Blass showroom. The bankruptcy filing came on the heels of creative director Peter Som exiting the label, retailers losing interest in the brand, and parent company NexCen enduring significant trouble in selling off the brand.

Bill Blass Limited – now known as Bill Blass Group, LLC – was acquired in December 2008 by Peacock International Holdings, LLC. In late October 2014, designer Chris Benz was appointed Creative Director of Bill Blass, which relaunched during the Spring of 2016. Upon his appointment, Benz said he was “…planning an e-commerce push, collaborations with up-and-coming designers and established artists, an accessories range and, possibly, a line of home goods.”

NOW: Still standing, the brand currently sells on Amazon and its own e-commerce site.

February 2008 – Heatherette

Fubu creator Daymond John, who acquired Heatherette in the mid-2000’s when it was in its heyday of showing during New York Fashion Week and garnering fans like Paris Hilton, said that despite injecting upwards of $6 million in the company, he and the label’s founders, Traver Rains and Richie Rich, could not make it work. Per John, the designers indulged in extravagant costume clothing for the runway but failed to develop a hot ready-to-wear retail line.

NOW: Who knows? The label is soundly defunct.

FY 1977 to FY 2001

January 2001 – Converse

Sneaker maker Converse announced in early 2001 that it planned to close three North American production plants, which employed about 1,000 people, and to shift production to Asia as part of a bankruptcy reorganization. Chairman and CEO Glenn Rupp insisted that the Converse brand and its sales were strong, but the company was simply too overwhelmed by debt dating back to its 1995 acquisition of ApexOne and subsequent litigation. It also suffered through a dramatic slump in the athletic footwear market worldwide in 1998 and 1999.

In July 2003, Nike paid $309 million to acquire Converse. Nike relaunched the brand’s footwear of choice and “Chucks” quickly became a cultural phenomenon once again. As a result, Nike expanded the Converse brand to other businesses apart from shoes, much akin to its other brands.

NOW: As of 2015, the company is bringing in roughly $2 billion per year, and is consistently making headlines for actively policing unauthorized uses of its intellectual property.

May 1999 – Loehmann’s (Round 1)

In the first of three round of bankruptcy proceedings, Loehmann’s – a chain of off-price department stores in the United States – filed for Chapter 11 reorganization in 1999, emerging in 2000 after closing 25 stores.

NOW: See above.

January 1994 – JNCO

Within months of filing for bankruptcy, the brand, which was popular among skater-types, closed all 1,500 its locations, making it one of the largest retail bankruptcies in history.

NOW: In early 2015, the fashion press was quick to proclaim that “JNCO is back in the spotlight,” set to officially relaunch in stores beginning in 2015. While the revamp has not yet caught on, the JNCO jeans style – the long, massively baggy denim – is making its way onto the runway. “Balenciaga designer Demna Gvasalia decided to tackle JNCOs. Keeping true to their original design (minus the massive back pockets), they’re just as voluminous as you remember,” per The Cut blog.

January 1992 – Macy’s

At the time of filing, Macy’s had experienced a $1.25 billion loss in its most recent fiscal year. The bulk of the loss was a result of costs associated with the massive reorganization proceedings, including store closings. Macy’s also was hurt by the weak economy, and disasters in two areas where it has a strong presence: Florida, hit by Hurricane Andrew, and Los Angeles, stung by riots.

NOW: After thriving for years, Macy’s, the largest department-store company in the U.S., has cut its earnings outlook, vowed to eliminate 10,000 jobs, or about 4 percent of its workforce, and close over 60 stores before the spring. Following a sluggish holiday season, the beleaguered retailer is taking more drastic steps to slim down as it copes with slow traffic and weak sales in key categories, such as handbags. It previously announced plans to shut 100 underperforming stores, and the chain has been evaluating ways to squeeze more money out of its real estate.

Moreover, if recent reports are accurate, Hudson’s Bay – the owner of Saks Fifth Avenue, Lord & Taylor, Gilt Groupe, and other retailers – is said to be in discussions to buy Macy’s.

1989 – Fiorucci

Fiorucci, the Italian fashion label founded by Elio Fiorucci in 1967, went into administration in 1989. [Note: A company in “administration” is either about to become insolvent, or is already insolvent (i.e. cannot pay its debts). The UK-based insolvency proceeding is very similar to the U.S. Chapter 11 bankruptcy process].

NOW: Fiorucci was rescued by the Tacchella brothers of Italian jeans company Carrera S.p.A., who ultimately sold the company to a Japanese jeans group, Edwin Co., Ltd, for roughly $41 million in 1990. The Fiorucci and Edwin Co., Ltd have since been battling over the rights in the Fiorucci name with the Italian Supreme Court ruling in October 2016 that the designer’s estate may not use his name.

Nonetheless, as of the Spring 2017 season, the brand will begin selling again, revived almost two years after the death of its founder, Elio.

1977 – Tommy Hilfiger

Before becoming an American fashion icon, Tommy Hilfiger launched his first brand, People’s Place, in 1971 – but after six years in business he filed for bankruptcy. Speaking of the expiree, he has said: “We went bankrupt. I was devastated. I was embarrassed. I had started with nothing and worked so hard, and we were so close to making it really big, but I had taken my eye off the ball. I believed that the business would just continue to do well. But it didn’t, because I wasn’t paying attention to the ‘business’ part of the business … I forced myself to learn the nuts and bolts of the business, and not solely on the creative side. I got hyper-focused on it. I learned how to read a balance sheet. I figured out how to control expenses and figured out a way to build a business on a shoestring budget.”

In 1985, Hilfiger launched his eponymous label with backing from the Murjani Group. In March 2010, Phillips-Van Heusen (PVH) bought the Tommy Hilfiger Corporation for $3 billion, in a deal that was nearly seven times what PVH had paid for Calvin Klein in 2003.

NOW: Tommy Hilfiger, himself, remains the company’s principal designer, leading the design teams and overseeing the entire creative process. In fiscal 2015, the Tommy Hilfiger brand accounted for 43.5% of PVH’s total revenue and 44% of its operating profit. As of December 1, 2016, Tommy Hilfiger revenue increased in the quarter to $927 million, and international revenue increased 16% to $525 million.

*This list was first published in December 2016 and has been routinely updated since then. 

Jessica Simpson is looking to buy back her brand after selling off a majority stake to the Camuto Group in 2005, a move that enabled the fashion label to “find its groove by targeting regular women, not the high-fashion types celebrities often attempt to court,” as Bloomberg put it back in 2015. Boasting more than two dozen product categories – from clothing to homewares – and big-name retail partners like Nordstrom, Macy’s, Lord & Taylor, and even Bed Bath & Beyond, Simpson’s brand was slated for super-sized growth under the watch of Sequential Brands Group, which snapped up the company from Camuto in 2015 with the aim of boosting revenues to as much as $3 billion. 

“The success of Ms. Simpson’s brand is a bit of an anomaly in the retail sector,” the Wall Street Journal wrote in 2015, reflecting on the success of the now-16-year-old empire. “While other celebrity brands have fizzled out, Ms. Simpson’s 10-year-old line has expanded” in a major way. At the same time, Bloomberg called the brand’s $1 billion in annual sales “an aberration in a retail landscape littered with dead celebrity brands.” Between the mass-market might of the Simpson brand and Sequential’s prowess in the fashion, home, active, and lifestyle categories, the plan for international expansion under the watch of Sequential – which paid $117.5 million in cash in addition to putting up an undisclosed amount of stock in exchange for a 62.5 percent stake in the brand – seemed to have serious potential.

Fast forward to August 31, and Sequential revealed that “significant debt on its corporate balance sheet” has prompted it to file for Chapter 11 bankruptcy protection in Delaware, and that it will sell the majority of its assets through an impending court-supervised auction. While the Sequential roster consists of an array of brands, including Gaiam, Joe’s Joes, Ellen Tracy, William Rast, and Caribbean Joe, the Jessica Simpson label is said to be the most compelling of all; the brand has reportedly maintained its $1 billion in annual sales (prior to the onset of the pandemic, at least).  

Bloomberg reported that as of August 31, two initial bidders had offered $375 million for many of the company’s assets. Meanwhile, the Simpson family is said to have reached a tentative deal with Sequential after putting forth an $88 million offer for the musician-turned-mogul’s eponymous label and nabbed the title of stalking horse bidder. 

The Business of the Eponymous 

Should the deal ultimately go through, it will be the latest in a string of instances in which fashion figures have bought themselves – or more accurately, their trademark rights – back after selling them off, which is rarely a small matter when those rights stem from an eponymous label, and therefore, tend to restrict the abilities of those individuals to conduct similar business under their names. 

Roland Mouret, the creator of the iconic “Galaxy” dress, for instance, sold off a controlling stake in his brand – and with it, the trademark rights in his eponymous label – to investors in 2010. After parting ways with those backers on the basis of “strategic differences,” the French designer was forced to adopt a new name – 19RM – in order to continue operating within the fashion space, but ultimately, bought back the rights in his name in 2010 for an undisclosed sum. “It took time — but I am really happy,” Mr. Mouret said of the deal at the time. 

Two years later, American designer Adam Lippes successfully re-acquired the rights to his eponymous brand from Kellwood, which had bought the New York-based fashion brand in 2010 in furtherance of what it called the “first in a series of aggressive expansion plans.” And still yet, one of the more famous examples dates back further – to the 1980s – when Halston bought back his name for use in the core category of apparel from Playtex, which acquired ownership of the legendary designer’s brand in 1983 after its parent, holding company Esmark, bought Halston’s then-owner Norton Simon. (Norton Simon Industries, a conglomerate that owned brands including Avis, Wesson Oil and Max Factor, bought the Halston brand for approximately $12 million in stock in 1973.)

In furtherance of the 1984 deal, Halston, himself, bought the trademark rights for the “made-to-order and ready-to-wear” divisions of the business, while Playtex retained the right to use the Halston name on fragrances; it also retained Halston’s now-notorious contract with J.C. Penney. The figures associated with the deal were never revealed, but Halston – born Roy Halston Frowick – did provide some insight into his initial sale of the business, saying, “At that time, I needed a better league of businessmen to take advantage of all the options in order to go on to bigger and better things.” 

Not all eponymous label sales end up the same way, of course. One of the most notorious cases in this area involves designer Joseph Abboud, who launched his label in 1987 and thirteen years later, in 2000, sold all of his rights in the brand to JA Apparel for $65.5 million. As part of the deal, Abboud let go of “all rights to use and apply for the registration of new trade names, trademarks, service marks, logos, insignias and designations containing the words ‘Joseph Abboud,’ ‘designed by Joseph Abboud,’ ‘by Joseph Abboud,’ ‘JOE’ or ‘JA,’ or anything similar to or derivative thereof, either alone or in conjunction with other words or symbols” in certain scenarios. 

Despite such restrictions on his future ability to use his name in connection with the manufacture and sale of apparel, that did not prevent Mr. Abboud from attempting starting a new label, JAZ, in connection with which he attached what would prove to be a problematic tagline, “A new composition by designer Joseph Abboud.” With such use of the Joseph Abboud name in mind, JA Apparel Corp. filed suit, alleging trademark infringement, and a New York federal court agreed, and formally prohibited him from using the tagline by a New York federal court in the late 2000s. 

Similar legal battles have plagued Gucci family members, for instance, following the sale of the once-family-owned brand to Kering in 1999, and more recently, wedding dress designer Hayley Paige Gutman, who has clashed with former employer JLM Couture over the right to use her name on wedding wear and social media. 

Taken together, these many legal squabbles are a testament to what could go wrong in the wake of “a transfer of rights or interest in or ceding of control over an eponymous brand to a third party (or to a friendly entity in which you do not have full ownership), which could diminish [a designer’s] right to use and/or control the use of his/her name and likeness,” according to  Loeb & Loeb’s Sara J. Crisafulli and Melanie J. Howard, who caution that this could very well see an individual forced to “give up domain names and social media accounts for his/her personal name, and ceasing any uses that could be confused with the use of his/her name as a brand by the company.”

In regard to Jessica Simpson, assuming that the Simpson family is not outbid in the process, their quest to add the outstanding 62.5 percent of the company to their existing 37.5 percent stake appears as though it very well might be a simpler – and less litigious – story than some of the uglier tales of eponymous labels. 

As for whether the brand will reach the level of $3 billion in annual revenue that Sequential had in mind when it acquired the brand back in 2015, the Simpson family is optimistic. A representative said in a statement last week that “the Jessica Simpson brand has been a consistently profitable and expanding entity over the last 16 years, now with 33 product categories, a social reach of 15 billion fans and a booming e-commerce business.” The rep further asserted that the team “looks forward to continued growth alongside their best-in-class licensing and retail partners.”

What do Pier 1, Radio Shack, Stein Mart, Dress Barn and now Ralph & Russo have in common? They are all currently fall under the ownership umbrella of Retail Ecommerce Ventures. On the heels Ralph & Russo announcing in March that it had entered into administration in order to “restructure the company and ensure its ongoing success,” the London-based high fashion house has been acquired for an undisclosed sum by Retail Ecommerce Ventures, which has readily been snapping up bankrupt brands since it launched in 2019, in furtherance of what the Miami-based firm calls a “strong track record of acquiring and growing iconic retail brands globally.”

In a statement on Thursday, Retail Ecommerce Ventures (“REV”) revealed that it has taken a controlling stake in Ralph & Russo following “a thorough and extended sales process that generated an immense amount of global interest and resulted in numerous parties submitting bids.” Media reports this spring suggested that “a handful of UAE and Qatari buyers” were among those interested in the esteemed fashion company. Given Ralph & Russo’s retail footprint in Doha and Dubai, and the presence of “Middle Eastern Royal families and ultra-high-net-worth individuals” in the region on its client list, Arabian Business stated in April that “it is not surprising that much of the lead interest in acquiring the company is coming from the Middle East.”

Meanwhile, Bloomberg reported that prospective buyers were likely to include “rival fashion houses, sovereign wealth funds, private equity firms and ultra-rich individuals.” Presumably not on the obvious list of acquirers: REV, the now-owner of a number of troubled American retail names, such as Pier 1, Stein Mart, and Radio Shack.

Speaking to REV’s plans for the 15-year-old fashion brand, the firm’s Executive Chairman Tai Lopez asserted that Ralph & Russo – which generated revenues of 15.2 million pounds and a loss of 14.8 million pounds for the fiscal year ending on March 31, 2019 – is a “globally celebrated brand with a unique position in the luxury sector and significant brand affinity.” With REV’s investment, he says that “there is massive potential” for Ralph & Russo “to retain and grow its market leading position at the forefront of luxury design.” 

Founded in London in 2006 by Tamara Ralph and Michael Russo, Ralph & Russo swiftly transitioned from a two-person-shop to a globally recognized couture-maker and the first British fashion house to be invited to take part in the Paris couture shows in a century. “We had a few very high-profile private clients right from the start and these few ladies spoke very highly of the work to their friends and it grew very quickly,” Ms. Ralph told Blouin ArtInfo in 2015. One such early supporter: Actress Angelina Jolie, who “started to wear some of their designs at important events, including her visit to Buckingham Palace to receive an honorary damehood from the Queen.” Fast forward and Ms. Ralph and Mr. Russo, a former couple, had amassed a stunning roster of private clients, including, of course, Meghan Markle, who wore one of the brand’s dresses for her official engagement photos in 2017.

The burgeoning young company’s grand expansion plan – which included a partially-completed plan to expand beyond its two appointment-only maisons in London and Paris to retail stores in Doha, Miami, New York, Monte Carlo, Malaysia, Hong Kong, Los Angeles, and Dubai – was ultimately cut short by the difficulties that came with the pandemic. Ms. Ralph revealed in March that “unprecedented trading conditions throughout the pandemic” had put a “tremendous strain” on the business, which was best known for its eye-wateringly expensive custom creations but has since expanded into ready-to-wear offerings, as well as shoes, handbags, and other accessories, which the company sells by way of its e-commerce site, as well as retail stockists like Saks, Net-a-Porter, and Moda Operandi.

Legal issues have also plagued the brand, which was named in a commercial lawsuit in a United Kingdom High Court early this year by Nick Candy’s firm Candy Ventures. The case centered on the terms of a 17 million pound ($23.4 million) investment in connection with which Candy took a minority stake in the brand. 

While Paul Appleton of Begbies Traynor Group, who acted as a Joint Administrator for Ralph & Russo, stated this spring that “the creative genius of Tamara Ralph gives this business the potential to be the next Chanel,” reports suggest that the brand’s founders – who are not cited or mentioned by name in REV’s acquisition announcement – will have little (if any) role going forward. Given that REV prides itself on “transform[ing] well-known undervalued retail brands into e-commerce success stories,” the future for Ralph & Russo will almost certainly be look quite a bit different than it did before. In light of REV’s lack of experience in the high fashion space, and without Ms. Ralph’s and Mr. Russo’s involvement going froward, the focus will almost certainly be on the brand’s more accessible offerings and offered up in a digital capacity, making is safe to assume that its reign as a purveyor of couture is coming to a close.

The family that formerly owned Brooks Brothers is in the midst of a $100 million legal battle after allegedly failing to “fulfill their contractual and fiduciary obligations to a Brooks Brothers minority shareholder and investor. In the complaint that it they filed on Monday in a New York federal court, Castle Apparel Limited and TAL Apparel Limited (the “plaintiffs”) assert that former Brooks Brothers chairman and CEO Claudio Del Vecchio, and his son – and former Brooks Brothers board member – Matteo, among others “breached their obligations and abused their position of power at Brooks Brothers when they put their own financial interests ahead of those of the company.” 

According to the newly-filed complaint, the plaintiffs argue that instead of “pursu[ing] bids for the acquisition of Brooks Brothers in 2019,” a scenarios that would have yielded “hundreds of millions of dollars for Brooks Brothers’ shareholders, including TAL,” Del Vecchios opted, instead, to “‘roll the dice’ by throwing Brooks Brothers into bankruptcy,” and selling off the company as part of the bankruptcy proceedings. “As a result of the Del Vecchios’ actions,” the plaintiffs allege that Brooks Brothers was “sold for a fraction of the price set forth in the 2019 bids, TAL’s equity position has been wiped out, and the Del Vecchios have breached their fiduciary and contractual obligations to TAL,” which made a $100 million equity investment in Brooks Brothers in 2016, when the famed American brand was wholly-owned owned by the Italian family. (Various entities controlled by the Del Vecchio family collectively owned 100 percent of Brooks Brothers from 2001 until 2016.)

To back up a bit, the plaintiffs assert in their complaint that things began to go downhill “by early 2019” when it became “clear that Brooks Brothers was not performing as the Del Vecchios had projected.” As a result of “deteriorating financing metrics,” TAL – which became a minority owner of the company following its 2016 investment – alleges that the Del Vecchios “began soliciting offers for Brooks Brothers from potential third-party buyers” without any involvement from the plaintiffs.” Despite the fact that TAL had “substantial rights and interest in such a process,” the Brooks Brothers majority owner “shielded” the bid-shopping process “from the view of Brooks Brothers’ Board of Directors and its minority shareholder, TAL.” 

“Notwithstanding the secrecy,” TAL claims that it “eventually learned that the Del Vecchios had received several attractive indications of interest to purchase the company that would have allowed Brooks Brothers to avoid bankruptcy.” And yet, the Del Vecchios did not pursue any of these sale bids “for one simple reason: each of these bids reflected a lower valuation than TAL’s initial investment and would have triggered the Del Vecchios’ obligations under [a] make-whole provision and required them to dip into their own pockets to pay TAL millions of dollars at closing.” 

As it turns out, as part of the Stockholders Agreement that the Del Vecchios entered into with in 2016 in exchange for its $100 million equity investment, the parties entered into a “make-whole provision that memorialized the Del Vecchios’ agreement to make TAL whole in the event that the company sold at a valuation that fell below TAL’s investment.” 

With that agreement in mind, and “to avoid millions of dollars of personal liability to TAL,” the plaintiffs argue that the Del Vecchios refused to consider a sale of Brooks Brothers unless TAL agreed “to reduce or waive its make-whole right.” When TAL refused to do so, the Del Vecchios allegedly pursued the bankruptcy route, filing a Chapter 11 petition with a Delaware bankruptcy court in July 2020, and ultimately, selling “substantially all of Brooks Brothers’ assets to a third-party buyer,” a venture formed by Simon Property Group and Authentic Brands Group, for $325 million weeks later.

In the process, and by “refus[ing] to pursue value-maximizing bids in an attempt to avoid their independent financial obligations to TAL,” the Del Vecchios failed to “act in the best interests of the Company, TAL, and other stakeholders,” thereby, running afoul of their fiduciary duty to maximize the value of the company, the complaint asserts. And more than that, the plaintiffs claim that the Del Vecchios also failed “to honor their commitment to make TAL whole in the event of a sale.” 

As a result, the plaintiffs have set forth an array of claims against the defendants, including breach of contract, breach of fiduciary duty, and breach of good faith and fair dealing, and two causes of action – tortious interference with contract and fraudulent inducement – against Claudio Del Vecchio, alone, in his personal capacity, arguing that its $100 million investment in Brooks Brothers is “now nearly worthless” as a result of the defendants’ foul play. TAL and co. are seeking damages to the tune of $100 million. 

The case is Castle Apparel Limited, et al. v. Claudio Del Vecchio, et al., 1:21-cv-04406 (SDNY).

Insolvency is stalking many businesses in the United Kingdom (and beyond) in the wake of COVID-19 and Brexit. This has been particularly visible in retail, with 2021 already seeing stationery chain Paperchase in administration and former high-street leaders Debenhams and Topshop being mopped up by online upstarts Boohoo and ASOS. Meanwhile, pubs and restaurants are lobbying hard to be allowed to open sooner rather than later, while Chancellor Rishi Sunak is signaling that the March budget will give more support to businesses and workers. 

But when the support measures finally stop, experts expect an insolvency tsunami. According to a recent Begbies Traynor Group report, the number of UK businesses in “significant distress” rose 27 percent year-over-year in the final quarter of 2020 to 630,000, with increases across all sectors. Business collapses will obviously be painful for a lot of people involved, but as a result of the law that governs insolvency in the UK, some stakeholders in these companies will come out a lot worse than others. 

The battle for priority

Perhaps the best example of the imbalance in insolvencies is in the world of football. Nearly half of clubs in top four tiers of the English leagues have gone through an insolvency since 1992. When a club enters administration, for example, the “football creditor rule” kicks in. This gives certain creditors priority status in getting their money back, including players, clubs and the football league authorities. 

It can lead to perverse outcomes: for instance, a multi-millionaire footballer might get paid ahead of a cleaner who is paid by an outside cleaning company that is owed money by the club. League authorities maintain that this rule exists for the financial integrity of the league, but it clearly creates losers, too. In the insolvency world, this is known as the “waterfall” because value trickles down a pre-determined hierarchy of all the groups of creditors. Jockeying for position is the name of the game. 

Once insolvency practitioners have been paid, the law prioritizes “secured creditors” over all others. These are creditors who have lent money in exchange for collateral – usually in the form of a mortgage over property or plant or machinery. These are known as fixed charges, and these creditors will normally be banks. They have maneuvered into this priority position in the hierarchy over many decades. 

Next comes “preferential creditors,” whose status has been granted by parliament. This includes employees, who can claim outstanding holiday pay and some unpaid wages. And very controversially, tax authorities were also recently re-added to the list of preferential creditors after an absence of two decades. 

After preferential creditors comes another type of bank lending in exchange for collateral, known as floating charges. These loans are secured against things like stock and raw materials, but could include any asset. Last comes “unsecured creditors,” which refers to the likes of customers and suppliers. This could be a customer who ordered a coat that is being custom-made, or suppliers that sell textiles to a fashion brand. 

Some unsecured creditors do manage to increase what they can recover in insolvencies. Some suppliers, for example, take out credit insurance. Others cleverly use contractual provisions that mean that they continue to own goods until their customer pays for them. 

Meanwhile, some customers that have become creditors of failed companies have been protected by the law of trusts in the past. This means that the money they use to purchase a sofa, or a Christmas basket, is specially reserved for them in a dedicated bank account. Those funds go straight back to the consumers, bypassing the insolvency process. We have seen this with Christmas savings clubs and some home-furnishing companies

The crumbs

Various studies have shown that unsecured creditors get lamentably little in an insolvency situation. Forty years ago, the emeritus Oxford law professor Roy Goode questioned whether the law was too favorable to secured creditors, and as far back as 1897 Lord Macnaghten, one of the most senior judges of the era, expressed “some sympathy for unsecured creditors.” That sympathy was well placed, then and now – particularly in view of coronavirus and Brexit. This is despite numerous attempts to improve their lot, such as the “prescribed part” rules

These entitle unsecured creditors to a small proportion of whatever the floating-charge creditors are able to extract from an insolvency process – though it only applies to floating charges agreed from September 15, 2003, which leaves quite a large proportion of them. 

Should the system be reformed? This depends on your position in the waterfall. Banks would say their priority ranking is necessary to allow them to provide the lending required for economic growth. Tax authorities and employees would also say they deserve their preferential treatment as they did not become creditors by choice. Unsecured creditors would probably say we need to do more to help them. The relevant legislation around the “prescribed part” was recently amended to increase the portion of value in each insolvency reserved just for these creditors. This was a step in the right direction, and it could be further reformed in certain ways to give these creditors a slightly greater share of the pie, including extending the entitlement to floating charges pre-2003. 

To help these creditors more than that, business associations such as the Institute of Directors could take more responsibility for educating smaller businesses about the ways in which some haul themselves up the hierarchy by using contractual provisions over who owns the goods they supply. These businesses might also protect themselves in the same way as Christmas clubs by requiring the customers they supply to ring-fence the money they owe before it is settled. 

These solutions may not be perfect, but as ways of improving the bargaining position of unsecured creditors, they are worth considering.

John Tribe is a Senior Lecturer in Law at the University of Liverpool. (This article was initially published by The Conversation)