Sequential Brands Group Inc., the long struggling owner of the Jessica Simpson brand, among others, has filed for voluntary Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware.
Sequential also owns Joe’s Jeans, Gaiam, And1, Avia and William Rast, but Jessica Simpson is the biggest brand in the portfolio.
WWD was first to report on Aug. 5 that Sequential sold its Ellen Tracy and Caribbean Joe Island Supply Co. brands to the GMA Group. Ellen Tracy sold for $17 million and Caribbean Joe was sold for $3 million. The sale was made by Brand Matter LLC, a subsidiary of Sequential.
GMA, a New York City-based, privately held, 30-year-old firm that also owns the Capelli and Ballet brands, would be a likely contender for Sequential’s remaining brands, or some of them. Capelli has a wide range of products including accessories, home goods, sporting goods and fitness equipment. Ballet is a jewelry brand.
Another potential bidder is Jessica Simpson herself. Sources have said Simpson and her mother, Tina Simpson, have been working with William Susman’s Threadstone firm to raise money to buy back the Jessica Simpson business. Sequential bought the master license for the sprawling lifestyle brand in 2015 and is believed to have maintained it with annual sales of around $1 billion, pre-pandemic.
On Wednesday, a spokesperson for Simpson issued the following statement: “I can confirm that Jessica and her mother Tina Simpson are indeed in discussions to buy back 62.5 percent of the Jessica Simpson Lifestyle Brand (of which they own the remaining portion). Jessica, Tina and their tight knit team of women are committed to continuing to provide their wide variety of consumers with the quality product and reasonable price point they have to come to expect. The Jessica Simpson Lifestyle Brand has been a consistently profiting and expanding entity over the last 16 years now with 33 product categories, a social reach of 15 billion fans and booming e-commerce. The team looks forward to continued growth alongside their best in class licensing and retail partners.”
In April, Sequential sold its Heelys brand to BBC International for $11 million, and in April 2019, Sequential sold its Martha Stewart and its Emeril Lagasse home divisions to Marquee Brands for $166 million.
Media reports cited court papers indicating that Sequential has debts of $435 million and assets of $443 million. Sequential had a debt load of $463.2 million, with a market capitalization of just $21.9 million, according to S&P Capital IQ, as reported last May. Around that time, William Sweedler, Sequential’s executive chairman, left the company. The company also managed to get waivers on its credit agreement.
The company also indicated it will be obtaining $150 million in debtor-in-possession financing, known as DIP financing, from its existing lenders. Sequential expects this financing, together with cash generated from ongoing operations, to provide ample liquidity to support its operations during the sale process. “The proposed transactions will be implemented pursuant to the terms of a restructuring support agreement reached between the company and its Term B lenders,” the company said.
Sequential said in its statement that it “has filed a number of customary motions seeking court approval to continue supporting its operations during the court-supervised process, including the continued payment of employee wages and benefits without interruption and other relief measures customary in these circumstances.”
