Frederick’s of Hollywood Seeks Chapter 11 Bankruptcy Protection

Bankruptcy law
On Sunday, April 19, Frederick’s of Hollywood Group Inc., a retailer known for its selection of racy women’s lingerie, filed for Chapter 11 bankruptcy protection after closing its remaining stores and settling a deal to sell itself as an online-only venture.

According to Bloomberg, the Los Angeles-based company notified customers it had closed all its store locations via its website. In bankruptcy papers filed at the U.S. bankruptcy court in Wilmington, DE, Frederick’s listed $36.5 million in assets and $106 million in debt. The company has not had a fiscally profitable year since 2007.

Businesses, companies and other enterprises file Chapter 11 bankruptcy as a means of restructuring certain debts and eliminating others. In 2013, 8,980 businesses filed Chapter 11 bankruptcy.

For Frederick’s, the Chapter 11 bankruptcy timeline will offer the privately held company a means to sell its e-commerce operations and inventory to Authentic Brands Group LLC for $22.5 million in cash and 25% of brand revenue, all under legal protection from creditors.

Founded in 1947, Frederick’s of Hollywood paved the way for some of today’s biggest women’s lingerie retailers like Victoria’s Secret. According to ABC News, the company cited increased competition, reduced customer spending, decreased mall traffic and “onerous leases” as the biggest factors behind its decade-long financial woes.

Frederick’s is the latest of several women’s retailers to file bankruptcy over the last two years. Delia’s, Dots and Loehmann’s have all succumbed to falling traffic in shopping malls and a growing consumer preference for online shopping.

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