Online fashion retailer files Chapter 11

Competition is fierce in the apparel business — even for online players with a devoted following.



Los Angeles-based women’s apparel retailer Nasty Gal has filed for Chapter 11 bankruptcy protection.



Sophia Amoruso founded the company as a store selling vintage fashions on eBay in 2006, and eventually transformed it into a popular online destination for young women in search of the latest edgy fashions. The company opened its first physical store in 2014, and another in 2015, both in the Los Angeles area.



The filing comes after a rough couple of years for the retailer as it struggled with flat sales amid an increasingly competitive market. It cut 10% of its staff last year. Amoruso stepped down as CEO in 2015, handing the reins to president Sheree Waterson, a veteran retailer who came from Lululemon. Although Amoruso has remained involved with the company as executive chairman, there are reports she plans to step down from the post. She is the author of two books, including the best-selling #Girlboss,



Nasty Gal said it has been exploring strategic partnerships with other brands and expects to attract a new equity partner or sponsor to help move it forward



"Our decision to initiate a court-supervised restructuring will enable us to address our immediate liquidity issues, restructure our balance sheet and correct structural issues including reducing our high occupancy costs and restoring compliance with our debt covenants," said Sheree Waterson, CEO Nasty Gal. "We expect to maintain our high level of customer service and emerge stronger and even better able to deliver the product and experience that our customers expect and that we take pride in bringing to market."



Nasty Gal estimated both its assets and its liabilities at between $10 million and $50 million in its filing with the U.S. Bankruptcy Court for the Central District of California.