Silver Jeans Stores Files Chapter 11, Plans Retail Liquidation

SJC Inc., the company that has been operating the Silver Jeans retail stores, filed for Chapter 11 bankruptcy protection on July 21 in U.S. Bankruptcy Court in Wilmington, Del., with plans to close the company’s six stores and liquidate inventory.

The Burbank, Calif.–based SJC was formed to roll out a retail business for Silver Jeans, the more than 20-year-old brand founded and owned by Canadian denim manufacturer Western Glove Works. The Silver Jeans brand itself is unaffected by the bankruptcy. The line is sold in more than 30 countries, including at U.S. retailers such as Macy’s, Dillards, Nordstrom, Buckle and Maurices,

“Our global wholesale Silver Jeans Co. business, which continues to grow, will not be affected in any way by this situation,” Michael Silver, Silver Jeans president, confirmed.

Last year, the company announced an ambitious plan to open up to 30 Silver Jeans retail stores over five years. Six stores opened in California, Minnesota, Texas and Illinois. Plans called for an omni-channel strategy that would blend Silver’s e-commerce and bricks-and-mortar channels. Retail associates were given mobile point-of-sale systems instead of a traditional cash wrap station. And the stores featured an 8-by-8-foot video wall showing music videos and Silver marketing videos.

But according to court documents, the stores—“originally projected to generate ‘four-wall’ profits in the first year”—were never profitable. The company cited “internal and external factors, including the extremely slow economic recovery in the United States and the resulting lack of disposable income in the target demographic, as well as steep competition from more-established brands such as Lucky and True Religion.” Operating losses were projected to exceed $2.8 million, according to court filings.

The company decided to file for Chapter 11 after attempts to renegotiate leases proved unsuccessful. According to court filings, SJC plans to reject the leases at five locations and hopes to liquidate its assets, which include inventory, furniture, fixtures and accounts receivables for goods sold. SJC has no secured debt, according to the bankruptcy filing. Its largest creditor is Western Glove Works, which is currently owed $7,153,022, according to court documents.

SCJ plans to enlist Hilco Merchant Resources LLC to liquidate its assets and retain most of its 44 employees to assist in store-closing sales and “to wind-down … business,” court papers say. If the bankruptcy plan is approved, stores would close by Aug. 31.

Silver Jeans was founded in 1991 by Western Glove Works. The brand launched with one unisex jeans style and, over time, grew into a $100 million company with stores in 30 countries around the world. Last year’s retail rollout included stores at the Glendale Galleria in Glendale, Calif.; the Mall of America in Bloomington, Minn.; La Plaza in McAllen, Texas; Stonebriar in Frisco, Texas; the Woodlands Mall in Woodlands, Texas; and the Woodfield Mall in Schaumburg, Ill. The California, Texas and Illinois stores are proposed to close. The Mall of America store, which had been sold to an affiliate, is still operating and will remain open.