The Lycra Company, a maker of spandex and other stretch fabrics, has filed for Chapter 11 bankruptcy protection in Houston, Texas, on Tuesday, seeking to shed $1.2 billion in debt.
Chapter 11 bankruptcy caps years of financial stress for Lycra. It’s the second time in four years that the company has been taken over by its creditors- lenders seized Lycra’s equity in 2022 following defaults under the previous owner, China’s Ruyi Textile and Fashion International Group Limited. However by the end of last year, utilisation rates across Lycra’s eight production facilities had fallen to around 60%, while its Ebitda was projected to slump to $44 million this year, from $132 million in 2024.
Lenders agreed to provide $75 million in new financing and to eliminate most of the company’s $1.53 billion in existing debt, according to court filings. The company said the restructuring will not affect its manufacturing operations, customers, vendors or employees.
The Wilmington,(Delaware) Company had been stretched thin for years, following a 2019 acquisition by Chinese textile company Ruyi Textile and Fashion International Group Limited, according to court filings. Lenders took over the business in 2022 after the company defaulted on its debt, but the company continued to underperform due to decreased demand, increased competition from lower-priced generic spandex products, unpredictable U.S. tariffs and lingering legal disputes with its former owners in China, according to the company.
The company, founded in 1958 as part of DuPont de Nemours Inc., was the original producer of spandex, and it remains one of the world’s leading spandex innovators. It has eight manufacturing facilities, three research labs and 11 offices across North America, Europe, Asia, and South America, with 2,000 employees worldwide.
