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Thread: Betsey Johnson LLC files for bankruptcy protection

  1. #1
    Elite Member Novice's Avatar
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    Default Betsey Johnson LLC files for bankruptcy protection

    Betsey Johnson LLC files for bankruptcy protection

    4/27/2012 COMMENTS (0)

    April 27 (Reuters) - U.S. fashion designing house Betsey Johnson LLC filed for Chapter 11 bankruptcy protection on Thursday, citing declining sales and profitability, and said it was seeking offers to buy all or parts of its business, court documents showed.
    The fashion house listed total assets of $21.3 million and total liabilities of $15.4 million at the end of 2011, according to the company's balance sheet that was filed with a U.S. bankruptcy court in New York.
    Betsey Johnson LLC, which runs over 65 Betsey Johnson retail stores worldwide and also sells products to department store operators like Nordstrom Inc and Macy's Inc, said it had so far been unable to find new buyers or investors.
    In the filing, the company said sales at its retail stores have fallen more than 20 percent and profitability has more than halved since 2007.
    "The economic recession had a devastating impact on higher-end fashion apparel brands, including Betsey Johnson Fashions," the company said, adding that cash constraints had left it unable to turn the situation around.
    For the fiscal year ending Dec. 31, 2011, Betsey Johnson generated sales of nearly $60 million, but recorded a negative EBITDA of about $5.7 million.
    On its corporate website, the company says its namesake owner, known for her bold and over-the-top styles, started the fashion label in 1978 in partnership with former model Chantal Bacon.
    The chain sells a mix of rock-n-roll and hippie-themed clothing, cocktail dresses and accessories that are mostly aimed at younger women.
    In mid-February 2012, the company engaged Morpheus Capital Advisors LLC to help find new equity investors or sell the business. Morpheus reached out to 22 potential buyers but was unable to secure a deal, the company said in the filing.
    Having failed to find a prospective buyer, Betsey Johnson LLC filed for chapter 11 bankruptcy protection in an effort to "maximize the value of its assets for the benefit of creditors," according to the court filing.
    The company said its primary objective is to strike an all-asset sale, either as a going concern or through an orderly wind-down process using a nationally recognized liquidator.
    The company has requested the court to approve a Debtor-in-Possession (DIP) financing of $2.5 million, which would be used to fund the operations until the sale process is completed.
    The case is in re: Betsey Johnson LLC, Case No.12-11732, U.S. Bankruptcy Court, Southern District of New York.
    For Betsey Johnson: Douglas Rosner of Goulston & Storrs.
    (Reporting by Sakthi Prasad in Bangalore)
    Follow us on Twitter: @ReutersLegal
    Betsey Johnson LLC files for bankruptcy protection
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    Elite Member Brookie's Avatar
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    I think Betsey's stuff is just a couple of hairs too quirky for the general public.
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    Super Moderator twitchy2.0's Avatar
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    It tends to straddle a line between fun and tacky. Lately it seems to have been more on the tacky side. I'd blame that more than the recession.
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    Elite Member witchcurlgirl's Avatar
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    The line lasted 34 years. In the fashion world that's an eternity, especially for a niche line like hers. The stuff she designed before her own line for Paraphernalia and Alley Cat was really great, ahead of it's time. She's America's Mary Quant.
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    Elite Member Air Quotes's Avatar
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    It really is either cool or tacky. That last outpouring of bags featuring skulls and roses puked all over it was fug and tacky.
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    If your assets are $6 million greater than your liabilities, how do you file for bankruptcy protection? Granted it's Chapter 11 so they intend to repay everyone, but still, that seems a bit odd.
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    Elite Member southernbelle's Avatar
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    I love her stuff but I agree that lately it just hasn't been as original (or as high quality) as it used to be.

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    Elite Member witchcurlgirl's Avatar
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    A sad glimpse inside the Betsey Johnson bankruptcy, from an unnamed member of the designer's runway design team who was laid off last week when the news broke: "As of two weeks ago we weren't allowed to spend any money — we couldn't buy trims, fabric, send out samples to be made domestically or abroad. Factories weren't sending us what we had ordered because they were worried about not being paid." Fifteen part-time and freelance employees were let go two weeks ago, and the remaining employees were sent off on Thursday with champagne and cupcakes.

    Interestingly, one reason the brand failed to attract new investment that might have saved it was allegedly differences of opinion over the business strategy pursued by Steve Madden, who took a management role at Betsey Johnson after stepping in to repay a $50 million 2010 loan the company would otherwise have defaulted on. At least three groups of potential investors toured the company in recent months, and entered serious discussions. "We kept being told that things would turn around, and the discussions with the investors seemed to last a long time — they were really receptive to the ready-to-wear sector of the brand, but when it got down to licenses, everything seemed to fall apart. They weren't agreeing with Steve Madden's vision for the brand, which was to take it down-market at a lower price point than what's sold in Macy's now."

    Betsey Johnson Throws A Bankruptcy Party



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