Spandex maker Lycra has filed for Chapter 11 bankruptcy with a plan to cut US$1.2 billion (A$1.69 billion) in debt amid a slump in demand for its products and increasing competition in the sector.
Lycra aims to emerge from bankruptcy within 45 days, it said. Under the plan, the company’s lenders would provide $75 million in new financing and over $1.2 billion of its debt would be deleveraged.
“Despite the Company’s leading market position and diversified brand portfolio, the Company has faced increasing financial pressure due to industry headwinds and the Company’s highly leveraged balance sheet,” Lycra wrote in court filings.
“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,” said CEO Gary Smith.
The restructuring will not impact Lycra’s customers, suppliers, employees, or manufacturing operations, per the company. Its Chapter 11 petition was filed in the U.S. Bankruptcy Court for the Southern District of Texas.
Lycra currently has $1.53 billion in existing debt, it said in court filings. This includes $780 million in dollar bonds, $520 million in euro bonds, and $214 million in super senior term loans.
The company credited its financial stresses to an ongoing slump in demand for spandex apparel beginning during the Covid-19 pandemic. Competitors in the industry have also ramped up capacity, with low-cost manufacturers pressuring spandex pricing and lowering Lycra’s market share in some segments.
Lycra’s EBITDA fell from roughly $132 million in 2024 to a projected $44 million for 2026, it wrote.
If its bankruptcy plan is approved, this will be the second time creditors have taken control of Lycra in four years. Creditors of its former parent company Shandong Ruyi previously took full equity control of Lycra in 2022 after it defaulted on a $400 million loan.
