New York-based Diesel USA, a unit of Italy’s Diesel SpA manufacturing premium denim and accessories, filed for bankruptcy in Delaware recently blaming dropping sales, a botched turnaround, expensive leases and resolute landlords, apart from cyber fraud and theft cases. The Chapter 11 petition estimates up to $100 million in assets and $50 million in debt.
Chapter 11 is a chapter of Title 11, the US Bankruptcy Code, which permits reorganisation under the US bankruptcy laws.New York-based Diesel USA, a unit of Italy's Diesel SpA manufacturing premium denim and accessories, filed for bankruptcy in Delaware recently blaming dropping sales, a botched turnaround, expensive leases and resolute landlords, apart from cyber fraud and theft cases. The Chapter 11 petition estimates up to $100 million in assets and $50 million in debt.#
The petition mentioned a three-year plan to rectify a strategy of leasing expensive stores in premium locations, thereby restoring the Diesel brand in the United States by opening new stores and making changes to some old ones to make them cheaper to operate, according to global news wires.
The US division, with 380 employees and 28 retail stores in the country, listed $7.4 million in unsecured obligations to trade creditors. It was profitable till 2008 and was just recovering from the recession when certain decisions taken by the earlier management started to catch up with it, according to court papers.
The company admitted to be the victim in multiple incidents of theft and fraud, resulting in losses of $1.2 million over the past three years, including from internet ‘spoofers’ who sent false invoices that the company paid.
Its turnaround plan includes collaboration with social media influencers, enhancing its denim collection for females, and relocating some stores to smaller cost-effective locations with lower rent. (DS)
Fibre2Fashion News Desk – India
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