This could be the decisive week for the cash-strapped Calypso St. Barth.
The breezy fashion brand is due back in a New Jersey bankruptcy court Thursday after a group of four creditors owed over $805,000 in trade debt petitioned the court this month to push the company into a Chapter 7 bankruptcy filing.
Attorney Kenneth Rosen, who chairs Lowenstein Sandler’s bankruptcy and creditors’ rights department and is working with the creditors, said the two sides had a status conference last week and will appear before Judge Vincent Papalia again on Thursday.
At that hearing, Rosen said: “creditors will want to hear what is CSB’s plan. Is it going to try to reorganize? Or, will it liquidate?” The creditors include Chinamine Trading, Hale Textile, Pucker Original Clothing and Michelle Clothing.
Rosen said the company owes $800,000 in unpaid sales taxes.
“Anyone who is a ‘responsible officer’ has potential individual liability. A responsible officer may be persons who had control over what CSB paid and didn’t pay,” he said. “The creditors will investigate who controlled CSB’s cash.”
Rosen also said the company’s trademark is owned by a separate corporate entity — one that has the same address as the company’s owner, Solera Capital — and that “creditors are anxious to know whether Solera Capital will put up more money so that CSB can reorganize.”
A lawyer representing Calypso in bankruptcy court did not respond to a WWD query on Sunday and Solera has no contact information on its web site beside a Madison Avenue address.
The case shows just how far Calypso has fallen.
Calypso Christiane Celle founded the retailer with a boutique in St. Barts in 1992 and the company enjoyed a growth spurt. By 2007, when she sold a majority stake to Solera, the company had 30 units, including 13 in Manhattan, and was trending toward $60 million in sales. The new owners paid off the company’s debt to leave it on a solid enough footing to double sales over five years.
But just seven months after selling control of the company, Christiane Celle resigned as chief executive officer and said she “reluctantly reached her decision after determining that she could not remain ceo and maintain the exacting standards of the Calypso brand she created under the constraints imposed on her by Calypso’s new owners.”
That year also brought a meltdown on Wall Street and a deep recession that hurt retailers across the board. Still, Calypso continued to expand under Solera and at one time operated 35 stores nationwide. But it changed merchandising strategies several times throughout the last few years as it sought profitable growth. Now the market is changing again with retailers with lower traffic overall and changing consumer preferences.
One financial source said factors have long since stopped signing off on orders to the retail company. And a private equity source told WWD that the brand has potential, but that the business “never figured out how to make money.”