Judge Stickles also expressed concerns over the company’s preliminary budget, calling it “bare bones” and requesting a more detailed plan on how the DIP funds would be used. The judge’s caution reflects the high stakes of the bankruptcy proceedings and the company’s mounting debt.
Closing Stores and Seeking a Buyer
With $226 million in total debt, Liberated Brands is facing a monumental challenge. The company owes $98 million in secured debt and an additional $143 million in unsecured claims, including unpaid royalties and trade debts. In a blow to its operations, the company has been granted permission to shut down 124 North American stores and begin liquidating its inventory through going-out-of-business sales.
In addition to its U.S. operations, Liberated Brands is actively seeking a buyer for its overseas assets in Australia, Europe, Japan, and Canada, which could help shore up its financial position. The company’s bankruptcy filing on Sunday marked the culmination of months of financial turmoil.
A Rocky Road to Recovery
Liberated Brands, formed in 2019 by former Volcom management, was initially buoyed by a pandemic-driven surge in demand for outdoor gear. However, rising inflation, high interest rates, and waning demand for its products have caused its financial situation to deteriorate. Despite efforts to find a buyer and cut costs — including a hiring freeze, layoffs, and divestitures — the company was unable to avoid bankruptcy.
