Nine West hits rock bottom and filed for bankruptcy

Nine West, an American fashion and footwear company that’s been on business for 35 years declared bankruptcy, citing $1.6-billion in debt. The privately owned chain will close all of its 70 store locations to cancel its leases.

They have failed several attempts to resemble many of those other retailers, to capture modern shopping trends resulting to excess inventory. Its problems were compounded by the fact that 80 percent of its sales were wholesale deals with department stores, but those retailers have been among the hardest hit in the past few years.

Authentic Brands Group has shown interest in buying Nine West for a line of bags, casualwear and jewelry, later announced they will be taking over. So you might still see the Nine West brand floating around.

According to a court filing, a group of unsecured creditors to Nine West have asked a federal bankruptcy court for permission to sue the fashion retailer’s private equity owner, Sycamore Partners, over an alleged fraudulent transfer and other claims totaling over $1-billion.

The creditors say that Sycamore designed its leveraged buyout of the Jones Group, which ultimately created the Nine West holding company to unfairly deflect the risk from Sycamore to Nine West’s lenders. The lenders shared none of Sycamore’s potential upside. (The namesake brand property of Nine West and Bandolino were sold to Authentic Brands Group, leaving the company’s remaining brands to reorganize in bankruptcy.)

The group further alleged that Sycamore, by carving out valuable pieces of the Jones Group, made $300-million net from the leveraged buyout while the Nine West holding company ultimately went bankrupt. The creditors said they had nearly reached a deal over the remainder of Nine West’s assets that would have prevented the motion to prosecute their claims against Sycamore.

These retailers are going through a period of upheaval, throwing into doubt the future of the retailers that once dominated the malls but has withered in the age of internet shopping.

One example would be Toys ‘R’ Us, they tried to emerge from its 2017 bankruptcy filing but was forced to liquidate six months later after creditors lost confidence in the toy retailer’s turnaround plan.

Nine West’s competitor Aerosoles Group was among at least a dozen retailers selling apparel, electronics and discount shoes filed  for bankruptcy last year to slash their store count and better compete with e-commerce giants like Amazon.com Inc.