Filing Alert: Spandex Maker Lycra Files Chapter 11
The Lycra Company Files Chapter 11 in Southern District of Texas
Update (Mar. 17, 2026): A comprehensive case summary is now available for the Chapter 11 bankruptcy filing of The Lycra Company LLC.
The Lycra Company LLC and its debtor affiliates⁽¹⁾, a Wilmington, DE-based manufacturer that is one of the leading producers of spandex for the apparel and personal care industries, filed for Chapter 11 protection on Mar. 17 in the U.S. Bankruptcy Court for the Southern District of Texas.
The company attributes its current distress to macroeconomic headwinds, including persistent inventory destocking, tariff volatility, and intensified pricing pressure from low-cost Asian competitors, which compressed margins and drove a projected EBITDA decline from $132 million in 2024 to $44 million in 2026. These operational challenges were compounded by a failed 2025 sale process to a Chinese state-owned enterprise, protracted litigation regarding a disputed RMB 574 million joint venture capital contribution in China, and an unsustainable take-or-pay supply agreement with HELM US Corporation. The HELM liability was ultimately mitigated prepetition via a $4.75 million settlement to preempt over $100 million in potential rejection damages.
To address its approximately $1.53 billion prepetition funded debt burden, the company filed a prepackaged plan pursuant to a Restructuring Support Agreement (RSA) backed by 100% of its Super Senior Term Loan (SSTL) and Euro Note claims, alongside over 83% of its Dollar Note claims. The plan effectuates a $1.2 billion net deleveraging anchored by a debt-for-equity swap, wherein the $214.1 million SSTL lenders will receive 100% of the reorganized equity and New Holdco Notes. Holders of the $520.4 million Euro Notes and $780 million Dollar Notes will receive respective tranches of newly issued warrants, existing equity will be canceled, and general unsecured creditors (GUCs) will ride through unimpaired.
To bridge near-term liquidity constraints and fund the Chapter 11 process, the debtors have secured a $75 million new money superpriority secured DIP notes facility priced at 9.00% PIK, with $50 million available upon interim approval. The RSA contemplates an expedited timeline featuring a 60-day confirmation milestone and an effective date within 75 to 90 days, upon which the DIP obligations will transition into a committed exit notes facility of at least $75 million to support reorganized operations.
The Lycra Company LLC reports $100 million to $500 million in both assets and liabilities. The filing indicates that there will be funds available for distribution to unsecured creditors. The case number is 26-90399.
⁽¹⁾ For a complete list of debtor entities, see the Chapter 11 Debtors table.
Chapter 11 Debtors
Top Unsecured Claims
Key Parties
Counsel:
- Arsalan Muhammad
Haynes and Boone LLP
Email: [email protected]
Restructuring Counsel:
- Linklaters LLP
- Haynes and Boone, LLP
Financial Advisor:
- FTI Consulting, Inc.
Investment Banker:
- Houlihan Lokey
Signatories:
- Dean Williams – Chief Financial Officer
Claims Agent:
Equity Security Holders:
- Eagle US Acquisition Corp. – 100% Equity Interest
Bondoro Insights is continuing to monitor this case and will provide further coverage as appropriate.
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