US women’s wear brand Betsey Johnson has entered Chapter 11 Bankruptcy protection.
On Thursday, it was revealed that Betsey Johnson LLC has filed Chapter 11. Betsey Johnson LLC is the licensee that operates the designer’s 63 freestanding stores, women’s apparel and e-commerce. It is run by Castanea Partners, the Boston-based private equity firm that bought a controlling interest in the company in 2007.
In a filing to the US Bankruptcy Court, Southern District of New York, the company said it made attempts to find new equity investors or sell the brand, but despite negotiations with two interested parties, no deal materialised.
Betsey Johnson LLC’s chief financial officer, Jonathan Friedman, said, “The decision to seek protection under Chapter 11 comes after months of rigorously pursuing alternative restructuring arrangements to address Betsey Johnson LLC’s cash-flow problems. After exhausting our resources and possibilities, it became apparent that neither a restructuring arrangement with a new equity investor nor a sale of the business enterprise as a going concern outside of bankruptcy was to be forthcoming. Accordingly, our board made the determination that a Chapter 11 store-closing process will likely be the best way to maximize the value of the company’s assets, for the benefit of its creditors.”
Despite all the upheaval, Johnson remains creative director of the brand and she will continue to oversee the design of her sportswear, accessories and various licenses. Going forward, the emphasis will be on the moderately priced Betsey Johnson label, which is sold at Macy’s Inc. and other retailers, as well as the litany of other categories. The Betsey Johnson Collection, which is carried in the designer’s freestanding stores and has dresses that retail for $395, has not sold nearly as well as the more middle-of-the-road Betsey Johnson label, which has a retail sweet spot of $128 to $148. About 75 percent of the spring line will be moderate-priced goods, with the remainder being editorial- and designer-range pieces.
There are plans to start closing the 63 stores in a few weeks with the help of a nationally recognized liquidation firm to be selected in the first weeks of the bankruptcy case.As a result, about 350 staffers are expected to lose their jobs.
The company’s largest unsecured creditors include Haskell Jewels, BC America, Parawin Industries and American Express.