Fashion’s Betsey Johnson plans post-bankruptcy comeback

January 7, 2013 8:05 pm Published by

Demonstrating that bankruptcy can provide a troubled business owner with a fresh financial start, fashion icon Betsey Johnson is planning a comeback less than a year after filing for business bankruptcy. The designer, who is known for her bright and flirty raiments, filed for Chapter 11bankruptcy in April 2012, listing millions in debt. That proceeding resulted in the closure of all 63 of her stores and dismissal of 350 employees. Johnson is back, however, with a new line of dresses just in time for spring.

Despite the bankruptcy proceeding, which she blamed on competitors selling cheap knock-offs of her expensive party dresses, Johnson went ahead with her plans for a runway show at New York’s Fashion Week in September. She now plans to release a new line of clothing and accessories at significantly lower prices than before. The new line will be available at Nordstrom, Macy’s and other department stores beginning in February. Johnson also plans a reality television series co-starring her daughter Lulu, also a fashion designer, and a summer release of a new fragrance, Betseyfied.

Filing for Chapter 11 business bankruptcy allows a company to stay in business by developing a plan for debt reorganization. This plan may include a structured repayment schedule, the closure of unprofitable stores, a reduction in staff and a sale of some or all of the business’ assets. The final plan must be approved by the bankruptcy court.

Chapter 11 bankruptcy allows a company to continue operating during debt reorganization, thus maximizing the company’s value to stakeholders. Bankruptcy also may offer business owners and investors a way to avoid personal liability for the company’s debts. An experienced bankruptcy attorney can help a business owner navigate the Chapter 11 process.

Source: Time, “Comeback Queen: After Bankruptcy, Betsey Johnson Plans 2013 Return,” Erin Skarda, Jan. 2, 2012

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