Premium denim label Habitual is on the auction block and could find itself in the hands of new owners by next month.
Parent company Pacific Marketing Works Inc. filed for Chapter 11 bankruptcy protection in the Central District of California on Feb. 20 and is looking to sell its assets in an effort to repay as much as $10 million in liabilities. The Los Angeles-based company owns the Habitual label, in addition to two other brands that specialize in T-shirts and graphic tops.
According to bankruptcy court filings, PMW is "in severe financial distress as a result of...a sale or merger transaction that failed late last year." Sources said last year PMW had been in talks to merge with a Japanese company that abruptly pulled out of the deal and left PMW in financial disarray.
According to the filings, PMW has assets of between $500,000 and $1 million, and liabilities of $1 million to $10 million.
PMW did not directly respond to a call for comment. However, Brad Jaco, owner and partner of Namaste Showroom, which handles North American sales for Habitual, was asked to serve as a spokesman for the company. Jaco read a statement on behalf of PMW indicating that the bankruptcy filing would enable the firm to maintain operations and continue shipping to all its retail customers.
Jaco also said a new owner was coming on board. According to the court filings, PMW is proposing to sell all assets and intellectual property to New Fashion Products Inc., a Los Angeles-based company that has been PMW's primary denim supplier. The purchase price has been set at $475,000.
"I'm now working hand in hand with New Fashion on the transition," said Jaco, who added that New Fashion manufactures denim for brands such as Hudson, Ann Taylor and Armani Exchange.
PMW will entertain other bids on its business assets and is requesting that anyone interested be required to submit a deposit of $47,500 before being allowed to conduct due diligence. Final bids must be received by April 15. Regardless of who picks up the brands, they will not inherit responsibility for PMW's liabilities.
"It will go from something that was troubled financially to something vertical and stronger than it's ever been," said Jaco, presuming New Fashion as the purchaser.
Jaco said he has spoken with Habitual's retail customers about the situation and that sales have remained strong. "Considering the climate, we're pleasantly surprised with the momentum of the brand," he said. Habitual recently expanded into kids', maternity and men's wear.
PMW's bankruptcy filing has added another twist in a battle between the company and Habitual's founders and original designers that has stretched out for more than two years. Michael and Nicole Colovos founded Habitual in 2001 and were runners-up for the Council of Fashion Designers of America/Vogue Fashion Awards in 2004. The relationship between PMW and the Colovoses began to sour soon after the two parties signed an agreement giving each a 50 percent share in Habitual.
According to a cross complaint filed by the Colovoses in Los Angeles County State Superior Court, PMW "continually and repeatedly failed" to provide adequate support for fabric, production, marketing and sales. The Colovoses contend they were repeatedly pressured to reduce their share of revenues. The complaint also alleges that PMW failed to provide an accurate financial picture of the business despite numerous requests. Habitual sales had grown to reach between $12 million and $15 million in 2006, according to the complaint.
The complaint stated that in February 2004 Nicole Colovos was told she could no longer work at the Habitual offices. By March 2006, the Colovoses were told their agreement with PMW was terminated and that neither would be allowed on the premises. A settlement entitling the Colovoses to $2.4 million was recently reached, but the bankruptcy filing could prevent them from collecting.
"They are attempting to collect that money and their efforts were stalled and thwarted by the bankruptcy filings," said Douglas Dal Cielo, a partner in the law firm Ropers, Majeski, Kohn & Bentley, who is representing the Colovoses.
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)