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.
“I grew up in New York but I hadn’t really experienced the city in any type of touristy way…This was probably the first museum I really explored and took the time to see,” said @haileybaldwin of the @whitneymuseum. On Tuesday night, Baldwin was joined by Jemima Kirke and more at the annual Whitney Museum Gala and Studio Party, which honored Lorna Simpson, Joanne Leonhardt Cassullo and Beth Rudin DeWoody. See more photos on WWD.com. #wwdeye (📷: @lexieblacklock)
Displayed starting this week at the @fashiontextilemuseum: An exhibition on designer @orlakiely titled “Orla Kiely: A Life in Pattern,” which spans two decades and contains more than 150 pieces. “I want people to come away loving pattern and print. It’s something that makes you feel so good,” said the designer during a preview of the exhibit. Also on show are mood boards, samples, sketches and more. Head to WWD.com to see more photos. #wwdfashion
Exclusive: @dsquared2 signs fragrance licensing agreement with Euroitalia, with the first effort of the new partnership being unveiled in September. The brand will launch two scents – one for men and one for women – in Italy. Read our interview with designer Dean and Dan Caten on WWD.com. #wwdbeauty #wwdnews (📷: @zefashioninsider)
@louisvuitton has officially renewed Nicolas Ghesquière’s contract as artistic director of women's collections. "I am very pleased to open the next chapter of the story I started with Louis Vuitton almost 5 years ago," said Ghesquière, who first signed on to design the French luxury brand's women's line in 2013. Get all the details on WWD.com. #wwdnews #wwdfashion (📷: @giovanni_giannoni_photo)
“I learned then and there that I had to figure out a way in life to maintain and preserve my sense of pride when I felt good about what I did or what I represented or created,” said @saintrecords on how being bullied for wearing capri pants inspired her to be the artist she is today. Knowles was at the 70th Parsons Benefit last night where she outbid the room for a Dapper Dan customized @gucci experience. #wwdeye (📷: @lexieblacklock)
“There’s this amazing braintrust of people who know the whole universe so well. So we talked to them and they gave us more input,” said actor Alden Ehrenreich on playing the young Han Solo in “Solo: A Star Wars Story.” The cast was at NYC’s SVA Theatre last night for an advanced screening of the film, which hits theaters this week. #wwdeye #starwars #hansolo (📷: @aurorarosedecrosta)
@asaprocky spent nearly two hours in a Plexiglas box Sunday night at @sothebys putting himself through a series of “tests” to demonstrate the process of completing his new album called “Testing.” Get all the details and see all the pictures on WWD.com. #wwdeye
“I’ve struggled my whole life to find a bathing suit that fits me that doesn’t look like a maternity bra. I’m proud of the line because it’s an accurate representation of me rather than me putting on someone else’s clothes,” says @atlantabean of her swimwear collaboration with @piaarrobio, LPA X ATL. The two decided on a swimwear collab and increased the industry standard size for the pieces. Read more about the line — and our interview with de Cadenet Taylor and Arrobio — on WWD.com #wwdfashion (📷: Dan Doperalski)