May 8, 2012
By: John Clark
Betsey Johnson LLC, which owns one of the country’s most venerable fashion lines, is filing for bankruptcy protection, according to a recent report from Forbes.
Sources say that Betsey Johnson’s filing will probably lead to the closure of the brand’s 63 stores, and will likely result in the dismissal of the company’s 350 core employees.
In its bankruptcy petition, the company cited "severe liquidity problems" as the primary cause of its insolvency, and it listed more than $4 million in debts that are owed to a wide range of aggressive creditors, including jewelers, watchmakers, banks and accountants.
Despite having to file for bankruptcy, the 69-year-old founder of the company, Betsey Johnson, who is famous for her cartwheels on the runway, yellow hair, and preference for neon colors in her designs, remains optimistic about her future.
In a press release, Johnson promised that, as "creative director, it’s full speed ahead at Betsey." Her optimism is not without merit, as Steve Madden, who has owned the company’s intellectual property rights since 2010, plans to keep the brand alive.
According to Madden, "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 also cited the success of the company’s wholesale business, which has seen profits rise by 50 percent in 2012, shows that the brand can still be successful, which is why he is comfortable saying that his group remained "firmly committed to Betsey Johnson."
And, to ease the concerns of fans of Betsey Johnson, the company will still sell its iconic clothing at Saks Fifth Avenue, Nordstrom, Bloomingdale's, and a small handful of other locations.
In addition, Johnson reportedly plans to continue designing sportswear for the brand, regardless of who eventually assumes ownership of the business. Despite all the optimistic press releases, though, the company still faces a shaky future, especially given its lagging sales in recent years.
When the company was unable to repay a $48 million loan to Steve Madden in 2010, the designer simply took over the company and earned the right to license the brand to other companies.
Now, the future of Betsey Johnson’s life work rests in Madden’s hands.
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