#Jessica Simpson brand owner Sequential Brands files for bankruptcy

Sequential Brands, which owns the Jessica Simpson brand and had formerly owned Martha Stewart’s brand, filed for bankruptcy protection on Tuesday.

The New York-based licensing company said its “significant debt” of $435 million pushed it into Chapter 11 — an outcome that had been long rumored and first reported by The Post.

The company’s stock fell by more than 60 percent after the announcement and trading was halted for a time; it was trading down more than 50 percent in late afternoon trade.

Sequential said it secured $150 million in financing that will support its operations while it tries to sell its seven brands, which until 2019 had included domestic diva, Martha Stewart.

The filing in Wilmington, Del., leaves its remaining brands  — Joe’s Jeans, activewear brand Gaiam and Avia, SPRI, AND 1 and William Rast, in flux. 

Simpson, for one, had been trying to snatch her company back before the filing, but failed to raise enough to acquire her clothing line. Sequential acquired a 62.5 percent stake worth $117 million in Jessica Simpson in 2015.

The company was able to unload a few other brands before the filing, including Caribbean Joe and Ellen Tracy for $20 million earlier this month as well as Heelys for $11 million in April. 

After several years of losing money on the Martha Stewart brand, Sequential sold it in 2019 for $213 million, or $140 million less than what it had paid for it in 2015. 

Stewart, however, remained on the board, becoming the company’s second-largest shareholder, owning 10.9 percent of the company. Its largest shareholder is Tengram Capital Partners, which is run by Sequential’s former chairman, Bill Sweedler, who resigned in May as it became clear that the company was headed toward bankruptcy.

Stewart resigned from the board in March and began dumping some of her shares in June, as The Post reported, attracting the attention of industry insiders who questioned why a former board member would sell shares in advance of a potential bankruptcy filing that was discussed by the board.

Stewart’s attorney told The Post that she “had no material nonpublic information, her transactions were fully compliant with applicable rules and any speculation to the contrary is simply meritless innuendo.”

She bagged more than $500,000 in several trades over the summer. 

Buyout firm KKR is Sequential’s largest lender.

The company is also facing charges by the Securities and Exchange Commission which has accused Sequential of violating accounting practices in 2016 and 2017.