The Lycra Company files for Chapter 11 and completes restructuring

July 2026 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

July 2026 Issue

The Lycra Company, one of the world’s leading producers of spandex and fibre technologies used in apparel and personal care products, along with certain affiliates, filed for Chapter 11 bankruptcy protection in March 2026 to implement a restructuring support agreement.

Reflecting a consensual agreement reached after several months of discussions with financial creditors, the agreement was designed to eliminate approximately $1.2bn of long-term debt and establish a more sustainable capital structure. The process aimed to recapitalise the business and position it for long-term financial stability and growth.

Recent headwinds, including supply chain disruption, reduced consumer demand during and after the pandemic, elevated inflation and competition from low-cost producers, and placed pressure on margins. These challenges were compounded by tariff uncertainty, pricing pressures and the costs associated with refinancing and debt management.

According to court filings at the time of the petition, estimated assets and liabilities were each between $100m and $500m, with between 200 and 999 creditors. The list of secured creditors included Kroll Agency Services Limited, which was owed $19.4m. Certain entities within The Lycra Company were not included in the Chapter 11 filing.

“The LYCRA Company’s products have long been a symbol of quality, delivering benefits like lasting comfort, fit and performance across a wide variety of apparel and personal care applications,” said Gary Smith, chief executive of The Lycra Company, at the time of the filing. “The filing marks a significant milestone for The LYCRA Company as we are taking decisive action to meaningfully reduce our debt and strengthen our financial foundation.”

The company sought customary ‘first day’ relief to enable it to continue operating in the ordinary course of business throughout the restructuring process. This included approval to pay suppliers and vendors in full for valid claims incurred during normal operations.

To support business continuity, the company secured commitments for approximately $75m in debtor in possession (DIP) financing, alongside more than $75m in exit financing intended to refinance the DIP facility on completion of the process.

Given the near-unanimous support of stakeholders, the company initially expected to complete its restructuring expeditiously, targeting emergence from Chapter 11 within 45 days. That expectation was realised, with the company confirming its plan and completing the process on 20 May 2026.

Following the court-approved restructuring, The Lycra Company emerged from Chapter 11 with more than $1.2bn of debt eliminated and more than $75m of new capital secured. Control of the reorganised business transferred to new equity owners, comprising investment funds that had previously held positions in the company’s securities.

Alongside the restructuring, the company implemented governance changes. A new board of directors was appointed, with Bruce Rubin named executive chairman. Dean Williams, formerly chief financial officer, was appointed interim chief executive, succeeding Gary Smith, who stepped down following the restructuring.

Recognised worldwide for its fibre innovation, technical expertise and marketing support, The Lycra Company focuses on adding value to customers’ products through materials designed to enhance comfort, durability and performance. It operates as a supplier of fibres to mills rather than a manufacturer of finished garments.

Headquartered in Wilmington, Delaware, the company employs approximately 2000 people and operates eight manufacturing facilities and 11 offices across North America, Europe, Asia and South America, with additional processing operations globally.

Acting as lead debtor counsel on the company’s prepackaged restructuring was Linklaters LLP, with Haynes Boone LLP acting as legal counsel. Houlihan Lokey served as investment banker, and FTI Consulting acted as financial and communications adviser.

The restructuring marks a decisive reset for The Lycra Company, strengthening its financial position and enabling renewed focus on innovation, operational resilience and long-term growth across global markets.

Fraser Tennant