Delta Apparel Inc., the parent company of beachwear brand Salt Life and activewear label Soffe, has initiated Chapter 11 bankruptcy proceedings with plans to restructure its operations through asset sales.
Key Points:
- Bankruptcy Filing: Delta Apparel filed for Chapter 11 bankruptcy protection on Sunday in Delaware, citing financial challenges exacerbated by rising raw material costs and reduced demand for its products.
- Asset Sales: The publicly traded company intends to sell off multiple assets, starting with its Salt Life brand. Forager Capital Management LLC has agreed to purchase Salt Life for approximately $28 million, under a stalking horse bid arrangement. This bid sets a minimum price, allowing for potential higher offers during the bidding process.
- Financial Details: In its bankruptcy petition, Delta Apparel disclosed assets totaling approximately $337.8 million and total debt of around $244.5 million.
- Operational Continuity: Despite the bankruptcy filing, Delta Apparel plans to continue its business operations as usual under court protection. The company has secured Chapter 11 financing from Wells Fargo Bank and existing lenders to support its ongoing operations during the restructuring process.
Analysis:
Delta Apparel’s decision to file for Chapter 11 bankruptcy comes amid industry-wide challenges including cost pressures from increased raw material prices and shifting consumer demand patterns. The sale of its Salt Life brand marks a strategic move to streamline operations and address financial obligations.
The bankruptcy proceedings, filed under case number 24-11469 in the US Bankruptcy Court for the District of Delaware, signify Delta Apparel’s proactive steps to stabilize its financial position and reposition its business for future growth.
For more updates on Delta Apparel’s bankruptcy proceedings and its strategic asset sales, stay tuned.
