After struggling with litigation, financing and a changing marketplace, Hampshire Group filed for Chapter 11 bankruptcy protection in Delaware.
The New York company said it was “unable to attract a financing source to provide adequate liquidity to fund the company’s ongoing strategic turnaround initiatives.”
“As a result, the company’s board of directors determined that an orderly liquidation and wind-down of its licensed businesses would be the best way to maximize value for the benefit of the company’s creditors and stakeholders,” Hampshire said in a statement. “Regrettably, the litigation efforts pursued by one unsecured creditor since July of this year have compelled the company and certain of its affiliates to seek protection under Chapter 11 in order to continue to pursue, and ultimately complete, the wind-down process without disruption.”
The largest unsecured creditor listed in the filing is Seoul-based Onewoo Corp., which is listed as being owed a disputed claim of $3.5 million. Onewoo sued Hampshire as well as its chairman and chief executive officer Paul Buxbaum and chief financial officer William Drozdowski in New York in June, alleging that it was owed $4.5 million for over 500,000 total units of shirts and pants delivered in the prior seven months. The suit claimed breach of conduct and fraud amid other charges.
Hampshire in its statement said, “While we are disappointed with this outcome, the prospect of the company being unable to continue to effectuate a controlled wind-down of its licensed businesses out-of-court were severely and negatively jeopardized by the actions taken by a single unsecured creditor.”
The company specializes in men’s sportswear for department stores and mass merchants, including Dockers under a license that was expanded in 2014, but has been shifting back to Levi Strauss & Co. this fall. Hampshire also made private label goods and was exploring options for its James Campbell brand.
In conjunction with the bankruptcy, Hampshire received a commitment from its senior secured credit, Salus Capital Partners, that will allow it to use “cash collateral in accordance with a mutually agreed upon budget that is designed to afford the company the requisite runway to consummate the wind-down effort that has been diligently pursued over the past several months.”