Betsey Johnson LLC has filed for bankruptcy protection.
The filing will likely result in the dismissal of 350 employees and the closure of most of the brand's 63 stores. It listed "severe liquidity problems" and $4.1 million in outstanding unsecured obligations owed to vendors, manufacturers, service providers and other creditors including jewelers, watchmakers, banks and accountants.
Steve Madden, who has owned the 34-year-old brand's intellectual property rights since 2010, said in an email that the group will continue to support the company and ensure existing orders will be produced and ship on time. Betsey Johnson clothing will still be sold at Saks Fifth Avenue, Bloomingdales and Nordstrom, along with a handful of flagship locations.
Word from the company is that Ms. Johnson will continue to design sportswear for the brand.
"While this particular licensee may be closing, the Betsey Johnson brand is stronger than ever, with a thriving wholesale business across a range of product categories," Madden said. "As the owners of the Betsey Johnson brand, we at Steve Madden remain firmly committed to Betsey Johnson – the designer, her vision and our growing wholesale business – which is up over 50 percent so far for 2012."
The company has struggled in recent years. Steve Madden forgave a $48 million loan when it took control in 2010, earning the rights to license the brand to numerous outlets. Castanea Partners, a Boston-based private equity firm, had taken over the company in 2007. According to the court filing, the company has requested approval of Debtor-in-Possession (DIP) financing of $2.5 million, which would be used to fund the operations until a suitable buyer or liquidator for the brand can be found.
The 69-year-old Johnson known for her end-of-runway cartwheels, yellow hair and liberal use of neon in her designs seemed--at least in writing--to be undeterred by the filing.
"I love our brand!" she said in a press statement. "As creative director, it's full speed ahead at Betsey."
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