(Bloomberg) — Spandex maker The Lycra Company has filed for Chapter 11 bankruptcy in Texas to implement a restructuring deal that will see most of its debt written off after creditors took control of the business.
The transaction will slash long-term debt by $1.2 billion, while providing additional capital of more than $75 million to support the company’s operations during and after the restructuring, Lycra chief financial officer Dean Williams said in the filing on Tuesday. Customers, suppliers and the company’s 2,000 employees will not be affected, according to the filing.
Chapter 11 bankruptcy caps years of financial stress for Lycra, which traces its roots back to 1958 when a group of scientists at DuPont created the original spandex yarn. 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.
A series of headwinds hit the company recently, starting with the disruption to supply chains and reduced consumer demand caused by the pandemic. Elevated inflation and growing competition from low-cost manufacturers in the years that followed, coupled with a weaker than expected recovery in key markets, piled on the pressure. On top of that, it was hurt by uncertainty from trade tariffs and the costs of refinancing and debt management efforts.
By the end of last year, utilization 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.
Lycra’s debt structure ahead of the Chapter 11 process included $214 million of super senior term loans, as well as $520 million of euro-denominated bonds and $780 million of dollar bonds.
Attempts last year to stabilize its finances came to nothing. In early 2025, the company said it was going to sell itself to another Chinese company and pay back all outstanding debt. By August, it became clear that the deal wouldn’t happen, and Lycra’s creditors pushed ahead with acquiring the firm as part of a previously agreed Plan B.
But Lycra’s financial position continued to deteriorate, meaning the restructuring originally envisaged by the backstop was no longer viable. After months of talks, the company eventually landed on the deal confirmed in Tuesday’s filing.
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