LOS ANGELES — Aris Industries Inc., the former owner of the XOXO juniors brand and a Baby Phat licensor, has filed for Chapter 11 bankruptcy protection.
Aris, whose president is Arnold Simon, owes as much as $10 million to about 150 creditors, including $875,000 to Russell Simmons, founder of Phat Fashions LLC, and $488,000 to CIT Equipment Finance, according to court documents. Aris owes its former landlord, 426 Broadway Associates LLP, $954,000.
The voluntary petition was filed Oct. 15 in bankruptcy court in Los Angeles. No trustee has been appointed.
Sales at Aris for the six months ended June 30 plummeted to $125,000 from $4.7 million. The company reported a net loss of $4.7 million, wider than $1.9 million for the previous six-month period. The revenue drop reflects the sale of the XOXO trademark and licensing operations and the substantial loss results from a decrease in operating margins primarily due to the sale of the XOXO trademark.
“They’re still operating…and have some business opportunities still available,” said David Golubchik, an attorney representing Simon.
Calls to Simon weren’t returned.
One shareholder, Gerard Guez, chairman of Tarrant Apparel Group, who owns a 7 percent stake in the firm with Tarrant vice chairman Todd Kay, said he was unaware of the filing.
“I’m so mad, I didn’t even know,” Guez said. “Shows how interested I am in what he does.”
Simon paid about $20 million in 1999 to acquire a 60 percent stake in the firm, which was then the maker of Members Only men’s outerwear, Perry Ellis America outerwear, activewear and casualwear and Fubu boys’ sportswear.
Aris then acquired the XOXO junior line and reached licensing agreements for Baby Phat women’s sportswear and Brooks Bros. Golfwear.
The company began transforming itself from a manufacturer to a licensor in 2001. The following year, it retrieved its trademark after a battle with former licensee Grupo Xtra. In 2003, the company sold XOXO, along with other trademarks, to Global Holdings LLC in a $43 million cash deal. Global Holding licensed the product to Kellwood Co.
Then, Aris terminated its Baby Phat licensing agreement with Phat Fashions LLC. Former XOXO president Steven Feiner bought the licensing rights for Baby Phat’s women’s apparel for $7.5 million. Feiner now produces the line in Los Angeles, which has retail sales in excess of $100 million.