After nearly 70 years in business, L.A.-based Fredrick’s of Hollywood – the racy lingerie retailer famous for introducing the push-up bra – has filed for Chapter 11 bankruptcy relief.
Citing issues such as expensive leases, increased competition and declines in mall traffic/storefront sales, Fredrick’s of Hollywood Group, Inc. has noted in its Chapter 11 filing that it only has about $36.5 million in assets and that it is carrying roughly $106 million in debts and liabilities.
The Next Steps for Fredrick’s…
Fredrick’s has noted on its website that all of its 94 physical stores shut their doors for good as of Friday April 17th (at its height, Fredrick’s had 200 storefronts throughout the U.S.). Despite the closure of these stores, however, the lingerie retailer has explained that it will continue selling its products online.
According to reports from Bloomberg, Fredrick’s has reached a deal to sell the remaining online-only retail company to Authentic Brands Group, LLC. That deal includes an agreement to sell the e-commerce operations, as well as all intellectual property and inventory, for $22.5 million cash. Additionally, the Fredrick’s Group will be entitled to 25 percent of future revenues earned by its brand, according to court documents.
As per Chapter 11 rules, Fredrick’s will also hold a court-authorized sale to give other potential buyers an opportunity to bid on and purchase the retail operations.
Interestingly, this is not the first time Fredrick’s has filed for bankruptcy. According to court records, Fredrick’s filed for bankruptcy in July 2000, and its exit plan was ultimately approved by the court in 2002.
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