The recent drumbeat of closures and weak financial statements has culminated in leading blank-apparel manufacturer Delta Apparel filing for Chapter 11 bankruptcy.
Per the company’s filing with the Securities and Exchange Commissions (SEC), submitted Tuesday, July 2, “As previously disclosed, on June 30, 2024, Delta Apparel, Inc. (the “Company”) and its domestic direct and indirect subsidiaries filed voluntary petitions (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.”
Also known as a “reorganization” bankruptcy, Chapter 11 bankruptcy is designed to allow a business currently overwhelmed by debt to continue operations while at the same time paying off its creditors.
Per an earlier, July 1, filing, Delta “will continue to operate their businesses as a debtor-in-possession and pursue a structured sale of their assets pursuant to one or more competitive bidding processes or other strategic arrangements involving such assets.”
Immediately prior to the filing, it was agreed Delta would sell its Salt Life brand to an entity known as FCM Saltwater Holdings, Inc. for $28.03 million. The agreement was expected to serve as a “stalking horse” bid, i.e., a bid designed to serve as a minimum amount other potential bidders can then counter, an early step in Delta’s efforts to return itself to good financial health.
In recent months, a number of leadership changes and divestiture and closure decisions, including the decision to shutter both its DTG2Go business and Honduras operations have rocked the company, making this most recent move no great surprise.
Earlier this year, in another statement to the SEC, Delta explained, “The company’s deteriorating liquidity position, including its limited cash and cash equivalents and its inability to date to raise additional capital or otherwise obtain necessary liquidity to have sufficient resources to fund its operations…prevent it from purchasing all of the yarn, dyes, chemicals and other production inputs required to supply its manufacturing facilities and allow them to run at the levels required to meet its business plans.”
