DANENBERG MAY NEED TO FILE CH. 11 PETITION
Byline: Miles Socha
NEW YORK — Facing mounting debt and a dearth of capital, designer sportswear firm Rebecca Danenberg is expected to file for Chapter 11 bankruptcy protection, the firm’s president, Charles Helm, revealed Tuesday.
Helm, who is also Danenberg’s husband, said a forthcoming overdue payment from one of its largest customers might stave off the filing, but he acknowledged the vulnerable state of the firm, and said a filing could come as early as today.
In a statement faxed to WWD, Helm said Boo.com was the customer from whom he was hoping for payment of $120,000 for goods shipped. Boo had ordered another $120,000 from Danenberg, which it is unable to accept, Helm said.
Boo.com declined to comment on relationships with its vendors.
Founded by Helm and Danenberg with $500 five years ago, the company has managed to almost double its sales every year. However, problems began when it outgrew its line of credit last year.
“When we ran out of the line of credit, it has just been downhill from there,” Helm told WWD. “We just couldn’t finance the growth of the business, and as you know, you either grow or die in this business.”
A chef by training, Helm confessed: “I never, ever dreamed it would take this amount of money to run this business.”
Helm said the company did about $3.8 million at wholesale last year. Its headquarters staff at 1 Rivington Street on the Lower East Side here had swelled to 19 full-time employees. But recently, the company had problems securing payment from some of its biggest accounts, which caused snags with its Japanese distribution partner, Sankyo Seiko, which operates freestanding Rebecca Danenberg stores in Tokyo and Osaka and is the New York designer’s largest client.
Sankyo Seiko officials in New York could not be reached for comment.
Helm said most of its staff has been laid off. Danenberg declined a request for an interview, but Helm indicated “she would like to see if the company can be saved.” Since March, Danenberg has been acting as a consultant on sportswear for Tahari Ltd.
Over the past year, Danenberg’s fashion career had been gaining momentum. Known for her edgy, streetwise sensibility, Danenberg caught the attention of the Council of Fashion Designers of America, which last year named her one of three finalists for the Perry Ellis Award for new design talent. The other nominees were Katayone Adeli and Josh Patner and Brian Bradley for Tuleh, who ultimately took home the prize.
Also last year, Danenberg had announced plans to join lower Manhattan’s burgeoning independent retail scene. She had signed a lease to open a 3,800-square-foot flagship store at 35-39 Bond Street, next door to Adeli, but the project was quashed due to cost overruns and a zoning dispute, Helm said.
Danenberg has two lines: a signature collection that retails from about $120 to $700 and the Red Tape sportswear line, priced from $60 to $200.
Danenberg owns a minority stake in a 1,200-square-foot Red Tape store at 333 East 9th Street in Manhattan’s East Village. Helm said that store will remain an ongoing business, irrespective of any possible filing.