A Georgia company known for its Salt Life beachwear brand and Soffe activewear brand could permanently close four North Carolina operations in three counties after filing for bankruptcy, resulting in the loss of 224 jobs, according to paperwork filed with the state.
Delta ApparelDuluth, Georgia-based company filed for Chapter 11 bankruptcy protection in Delaware on June 30. It is seeking a new owner.
“If the company is unable to conclude a suitable transaction, the planned closure will take place
“permanent,” according to a notice filed with the Department of Commerce.
“We are still hopeful that no one will have to be laid off,” said a company spokesman who asked not to be identified. The company will have more details within 30 to 60 days, the spokesman added.
“The Company was unable to provide prior notice as it was actively seeking a transaction that would permit the continuation of operations and believed in good faith that the possibility of business interruption accompanying the notice would have affected its ability to obtain such a transaction,” the notice states.
The company filed paperwork with North Carolina that same day announcing it may permanently close operations in Cabarrus, Cumberland and Robeson counties. Job losses total 22 (white-collar jobs) in Cabarrus County, a manufacturing and distribution site in Cumberland County totaling 156 jobs, and 46 jobs in Robeson County at a manufacturing site in Rowland.
The effective date of the layoffs at all four locations is Aug. 29, according to filings with the North Carolina Department of Commerce. All employees have been notified that they could lose their jobs after Aug. 29.
According to the company’s bankruptcy petition, as reported by Bloomberg, Delta Apparel had about $337.8 million in assets and $244.5 million in total debt. Rising prices for cotton and other raw materials, as well as lower demand for its products, contributed to its financial troubles, according to court documents.
Shares closed at 20 cents, down 55%. Delta Apparel has traded between 2 cents and 45 cents over the past year. It traded at more than $30 in 2021. The company reported $415.3 million in sales last year, compared with $484.9 million the year before.
Similar notices were filed in South Carolina, Florida, Texas, Arizona and Georgia. The company has about 600 employees in the United States and several thousand more in Mexico and Honduras.
Four surfing friends from Florida launched the Salt Life line of beach shirts and board shorts in 2003. The company was acquired by Delta Apparel in 2013 and for a time shared space with MJ Soffe, a Fayetteville-based casual and activewear outfitter that Delta Acquired in 2003The NC company was founded in 1946 by the late MJ Soffe, an army veteran.
Prior to its Chapter 11 filing, Delta Apparel entered into an asset purchase agreement with FCM Saltwater Holdings (Forager Capital Management, based in Birmingham, Alabama) to acquire the marketing, sourcing, licensing and sales of its Salt Life branded products for an aggregate purchase price of approximately $28 million in cash, according to Bloomberg.
The purchase price is subject to adjustment after closing of the Salt Life transaction based on final net accounts receivable and certain inventory calculations.
Following bankruptcy court approval, FCM Saltwater Holdings is expected to be designated as the “lead” bidder in connection with the sale of Salt Life Assets under Section 363 of the Bankruptcy Code, according to Bloomberg, meaning it will set the minimum price for the brand.
In North Carolina, the Fayetteville plant, with 55 employees, is tied to Salt Life operations, while the rest are affiliated with Soffe. The fate of that plant is still undecided, even if the sale goes through.
On June 6, Elkay Partners, NY backed out of an agreement with Delta to purchase Delta’s 35-acre campus in Fayetteville for $23.5 million and then sign a long-term lease of the property to Delta, according to an SEC filing.
As of June 5, Justin Grow, the company’s chief administrative officer, and Matthew Miller, president of Delta Group, have announced their resignations, which are now effective. Nancy Brubanich, chief accounting officer, will leave the company on July 26, according to a document filed with the SEC.
An earlier version of this story had an incorrect number of Delta job losses due to incorrect information on the Commerce Department’s website.
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