This chaotic time in American history is as good as any for businesses to do a little news-dumping. Women’s Wear Daily is reporting that clothing retailer Nasty Gal has filed for Chapter 11 bankruptcy protection. Nasty Gal was founded by self-proclaimed #girlboss Sophia Amoruso; Jezebel has previously covered at length the company’s alleged mistreatment of their largely female workforce.
Amoruso’s personal brand is reliant on being a fierce young feminist entrepreneur, but employees at the company had repeatedly told us that the environment at Nasty Gal was both “toxic” and unstable. The company has been through two rounds of layoffs this year, one in February and one in October. WWD reported in September that the company was seeking a buyer. (Amoruso refused to confirm that, telling WWD, “The sale was speculated. I’m not sure where that came from. It’s nothing we’ve reported or confirmed.”)
At the time, a vendor who sells to the company—and who asked for anonymity to protect their business relationships—told us that they hadn’t been paid by Nasty Gal in three weeks, but were still being asked to provide product. The vendor told us a Nasty Gal employee informed them that no vendors were being paid for 30 to 45 days, part of an effort to “cut costs and trim the fat” in preparation for a sale or a new wave of venture capital funding. The vendor was asked to be “a good brand partner, and keep product flowing through this difficult time.”
WWD reports that Nasty Gal filed their petition Wednesday in bankruptcy court. Chapter 11 does not mean the company is going out of business; current CEO Sheree Waterson said in a statement that it would help them “emerge stronger”:
“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. 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.”
Recode also reports that sources have told them Amoruso will resign as executive chairwoman of the company. She published a new book in October, Nasty Galaxy, and is currently featured in an ad campaign for the company Squarespace. She also has a #Girlboss podcast and a foundation by the same name, which says it has given $120,000 in grants to aspiring women entrepreneurs since 2014, and Netflix is working on a show based on her life. She has not publicly commented on the Chapter 11 filing, or her future with the company.