Liberated Brands has filed for Chapter 11 bankruptcy amid mounting debts and unpaid royalties.
According to SGB Media, the company plans to sell parts of its operations and wind down other areas due to a drop in consumer demand and macroeconomic headwinds in the past years.
The filing came after Authentic Brands pulled its brands from Liberated and re-assigned them to other partners after Liberated failed to make royalty payments, court documents show.
CEO Todd Hymel stated in a declaration that the company owes $83 million in secured debt and $143 million in unsecured debt, including $15 million from a promissory note, $78 million in trade claims and about $50 million in unpaid royalties under brand licensing agreements.
“The debtors intend to promptly file a Chapter 11 plan that will enable the debtors to conclude the orderly and expeditious monetization of their assets and make distributions to creditors,” Hymel said.
The firm has closed its corporate offices and laid off nearly 1400 employees. It began liquidating stores under a deal with Gordon Brothers last month.
Authentic Brands formed Librated as the operating company of Volcom after acquiring the brand in 2019. Authentic took a minority stake in the company while the management team of Volcom held the majority stake.
Liberated secured the license for Spyder in 2021. In 2023, it received the license for Quiksilver, Billabong, Roxy, RVCA, DC Shoes, Element, VonZipper, Honolua, and Boardriders from Authentic.
The company witnessed strong revenue growth in 2022 thanks to a post-Covid boom in demand, but changing consumer behaviour resulted in a sharp drop in both sales and profit last year.