Delta Apparel (PPAI 188431, Gold) – the No. 69 supplier in the 2024 PPAI 100 – is filing for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Delaware.

The Duluth, Georgia-based supplier reported between 200 and 299 creditors as of June 30.

  • At the beginning of June, the company had $337.8 million in total assets and $244.5 million in labilities according to the filing.
  • Its largest creditor is Park Mills, which is owed more than $22 million from Delta Apparel.

Tim Pubian, president of Focus Management Group, was named chief restructuring officer in May, after Delta’s board of directors pushed out CEO Robert W. Humphreys amid ongoing financial struggles.

  • Pubian has been given board authorization to enter into a debtor-in-possession agreement with Wells Fargo Bank that would allow him to pledge the company’s assets or allow liens to be placed on its property to secure that agreement, pending court approval.

FCM Saltwater Holdings has reportedly offered $28 million to buy the Salt Life brand from Delta Apparel, which the supplier is expected to agree to.

  • Salt Life produced a revenue of $59 million for the fiscal year that ended September 30, 2023.
  • Delta hopes that the FCM Saltwater Holdings offer will serve as a stalking horse bid, a term for the initial bid on the assets of a bankrupt company, which sets a minimum price for other potential bidders.

In June, the company suspended its manufacturing operations in Honduras as it attempted to work through its liquidity challenges.

“The company’s deteriorating liquidity position and lack of funding has continued to prevent it from purchasing raw materials necessary to operate its offshore manufacturing facilities and to pay compensation and benefits due to offshore employees,” Delta Apparel said in the SEC filing at the time.

In May, the apparel maker reported that its net sales for the fiscal second quarter were $78.9 million, down nearly 40% from the same period last year.

Net sales from its retail stores segment – Salt Life Group – were $15.5 million in Q2, down about 22% from Q2 2023.

In the 2023 fiscal year, which ended September 30, 2023, Delta Apparel reported a loss of $33.2 million.