US’ LYCRA Company initiates bankruptcy process to reduce $1.2 bn debt

The LYCRA Company, a provider of fibre and technology solutions for apparel, has filed a voluntary prepackaged Chapter 11 case (bankruptcy process) in the US Bankruptcy Court for the Southern District of Texas after entering into a restructuring support agreement (RSA) with the vast majority of its creditors. The move will eliminate approximately $1.2 billion in long-term debt, establish a more sustainable capital structure, and strengthen its financial position for long-term stability and growth.

The RSA has received overwhelming support from holders of the company’s senior secured term loan, 16.000 per cent senior secured notes, and 7.500 per cent senior secured notes, who have agreed to vote in favour of a ‘Prepackaged Plan’ of reorganisation, LYCRA said in a press release.

The LYCRA Company has filed a prepackaged Chapter 11 case in the US to reduce about $1.2 billion in debt and strengthen its financial position.
Backed by most creditors, the restructuring is expected to conclude within 45 days.
The company has secured $75 million in DIP financing and over $75 million in exit funding, ensuring continued operations and supplier payments during the process.

The prepackaged plan reflects a consensual agreement reached over several months of discussions with key financial creditors. Given the near-unanimous stakeholder backing, the company expects to complete its financial restructuring expeditiously and emerge from Chapter 11 within 45 days.

“The LYCRA Company’s products have long been a symbol of quality, delivering benefits like lasting comfort, fit, and performance across a wide variety of apparel and personal care applications,” said Gary Smith, chief executive officer of the LYCRA. “Today marks a significant milestone for The LYCRA Company as we are taking decisive action to meaningfully reduce our debt and strengthen our financial foundation. By taking this step, we will continue serving our customers, supporting our partners, and providing the high-quality products on which they rely. I want to thank our team members for their ongoing dedication and our loyal customers and partners for their continued support throughout the process.”

The company is seeking customary ‘first day’ relief to ensure continued operations during the restructuring. As part of these motions, it will request approval to pay valid amounts owed to vendors and suppliers in full. To support operations, it has secured commitments for $75 million in debtor-in-possession (DIP) financing and over $75 million in exit financing, which will refinance the DIP facility upon completion of the Chapter 11 process.

Fibre2Fashion News Desk (SG)