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Escada America files for bankruptcy

(Source: Bigstock)

Following failed lease negotiations and challenges from the ongoing pandemic, Escada America has filed for Chapter 11 bankruptcy.

The women’s fashion retailer which operates 10 stores in the US is looking to close five stores under bankruptcy protection. The company says it wants to avoid ‘senseless and unnecessary liquidation’ and pay back creditors while reorganising itself through the bankruptcy process.

The brand had big plans to turn itself around pre-pandemic only to be shot down by the ever-increasing financial distress and store closures due to Covid. During the pandemic, the company had to cut $13 million in expenses and negotiate lower rents with landlords to keep going. 

Kevin Walsh, director of finance, expressed that some commercial landlords were ‘reasonable’ and willing to negotiate to make things workout in 2020 and last year. 

“However, there remain multiple landlords that have remained obstinate, and the end of the government’s Covid-19 anti-eviction and anti-foreclosure protections are for many landlords a herald’s call to commence lawsuits and eviction,” he said.

Walsh understands that the company will not survive potential liability breaches of leases along with attendant litigation costs levied by landlords.

Escada America was formed in 2009 from previous bankruptcy by Escada USA. The retailer is known for upscale women’s apparel with subsidiaries in Europe. In 2019, Escada’s owner – The Mittal family – sold the company to the private-equity firm Regent.

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