Sequential Brands, owner of the Jessica Simpson Collection, has filed for Chapter 11 protection in the US Bankruptcy Court for the District of Delaware.
The company is looking to divest most or all of its assets through a court-supervised auction during the proceedings.
In a statement, Sequential Brands said: “[We] determined that, as a result of the significant debt on its corporate balance sheet, [we were] no longer able to operate [our] portfolio of brands.”
“[We] will seek approval from the court of auction and bidding procedures that are designed to maximise the value of [our] assets through an open process that enables interested buyers to submit a bid or bids on [our] assets.
“[Sequential Brands] believes that each of its brands is well-positioned for profitability under the stewardship of new owners.”
Sequential Brands has secured $150m in debtor-in-possession financing from its existing Term B lenders.
New financing and cash generated from ongoing operations will facilitate the company’s operations during the sale process.
Any proposed transactions will be implemented in accordance with the terms of a Restructuring Support Agreement reached between the company and its Term B lenders.
Sequential Brands has filed a number of customary motions seeking court approval to continue supporting its operations during the court-supervised process.
These include the continued payment of employee wages and benefits without interruption, as well as ‘other relief measures customary in these circumstances’.
Gibson, Dunn and Crutcher acted as legal counsel for Sequential Brands during the process, together with Pachulski Stang Ziehl and Jones.
On 19 July, the company closed the sale of its 65% interest in DVS Footwear International for $2m in cash.
The stake was sold to Elan Polo International, a US-based company that supplies stock to apparel retailers worldwide.
Last month, Sequential Brands sold its Ellen Tracy and Caribbean Joe brands to GMA Group for $20m.
The company’s portfolio also includes AND1, Gaiam, SPRI and Avia among other brands.