Asian Manufacturers Trying to Force Liquidation of Ellen Tracy
A group of Asian manufacturers are trying to force Ellen Tracy into bankruptcy. The manufacturers filed an involuntary Chapter 7 bankruptcy petition against the American apparel brand in bankrutpcy court in Manhattan. The creditors say they are owed $3.8 million and want the company liquidated to pay its debts.
Ellen Tracy, which sells its clothing brand through stores like Neiman Marcus NMRCUS.UL and Saks (SKS.N), started as a blouse company in 1949, according to its website. An investment group led by Windsong Brands LLC and Hilco Consumer Capital acquired the brand and its associated assets from Liz Claiborne Inc (LIZ.N) in 2008. Hilco representatives were not immediately available to comment.
The creditors based in Shanghai and Hong Kong include, Shanghai K&J Apparel Co, Chinamine Trading, Shanghai Mandarin Fashion Limited and Excellent Jade Limited. They are being represented by Kenneth Rosen, an attorney at Lowenstein Sandler, according to court papers.
Ellen Tracy now has 20 days to respond to the petition. This is a very serious move by the creditors. For it to have gotten this far, it means that things are very, very bad over at Ellen Tracy. Clearly the company is not paying its debts as they come due, and negotiations with creditors must have totally failed.
No doubt Ellen Tracy's attorneys are scrambling to issue a statement to the public and respond to the petition, the filing of which could seriously jeopardize any ongoing negotiations to get interim financing.
