MJP –
The Georgia firm that is well-known for its beachwear line Salt Life and its sportswear line Soffe may permanently shut down four North Carolina facilities in three counties following its bankruptcy, causing 224 jobs to be lost, according to documents submitted with the state.
Situated in Duluth, Georgia, Delta Apparel initiated the Chapter 11 bankruptcy process in Delaware on June 30. A new owner is being sought after.
A notification was filed with the Department of Commerce stating that “the planned closing will be permanent” if the company is unable to finalize a suitable deal.
“We’re still hopeful the layoff doesn’t have to happen,” said a named corporate spokesperson. A further 30 to 60 days will pass before the firm learns anything more, the representative stressed.
The notice explained that the company was trying to find a way to keep operations going and was honestly worried that giving notice would have made it harder to close a deal.
On the same day it announced it might permanently close operations in Robeson, Cumberland, and Cabarrus counties, the business lodged paperwork with North Carolina.
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Lost jobs include 22 administrative positions in Cabarrus County, 156 at a manufacturing and distribution location in Cumberland County, and 46 at a manufacturing site in Rowland, Robeson County.
Paperwork submitted to the North Carolina Department of Commerce indicates that layoffs will take effect at all four locations on August 29. Employees were informed that their employment status may change after August 29.
Approximately $337.8 million in assets and $244.5 million in total debt were listed by Delta Apparel in their bankruptcy case, as reported by Bloomberg. As stated in court documents, the company’s financial woes were exacerbated by rising raw material prices (including cotton) and falling product demand.
Closed at 20 cents, shares were down 55%. Throughout the last twelve months, the value of Delta Apparel has fluctuated between two cents and forty-five cents. The price reached over $30 in 2021. Following a $484.9 million performance the previous year, the business posted sales of $415.3 million this year.
There were notices filed in South Carolina, Florida, Texas, Arizona, and Georgia that were similar. The number of employees in the United States is around 600, whereas in Mexico and Honduras, there are several thousand more.
In 2003, a group of four surfers from Florida debuted their Salt Life collection of sandy board shorts and T-shirts. After being bought out by Delta Apparel in 2013, the company briefly shared facilities with M.J. Soffe, a casual and athletic apparel manufacturer from Fayetteville that Delta had acquired in 2003. The late M.J. Soffe, an Army veteran, established the North Carolina firm in 1946.
Bloomberg reports that shortly before Delta Apparel filed for Chapter 11, it had an asset purchase agreement in place to sell, license, market, and source its Salt Life brand products for around $28 million in cash with FCM Saltwater Holdings (Forager Capital Management) of Birmingham, Alabama.
There may be a change to the acquisition price when the Salt Life transaction closes, depending on the final net accounts receivable and specific inventory estimates.
As per Bloomberg’s reporting, FCM Saltwater Holdings is anticipated to be named the “stalking horse” bidder about the sale of the Salt Life Assets under section 363 of the Bankruptcy Code, meaning it will establish the minimum price for the brand after the bankruptcy court’s consent is obtained.
In North Carolina, 55 people work at the Fayetteville facility that is associated with Salt Life operations; the remaining workers are associated with Soffe. That plant’s destiny is still out in the air, regardless of whether the deal goes through or not.
According to a filing with the SEC, Elkay Partners, NY LLC pulled out of a contract with Delta on June 6. The deal was to buy Delta’s 35-acre Fayetteville campus for $23.5 million and then establish a long-term leaseback with Delta.
The company’s chief administrative officer, Justin Grow, and the president of its Delta Group, Matthew Miller, both announced and had their resignations accepted on June 5. Nancy Brubanich, its chief accounting officer, will leave the company on July 26, according to an SEC filing.
