As Liberated Brands Head to Auction, Who Will Buy?

The sale of Liberated Brands’ assets should be swift, if a bankruptcy judge approves the timeline set out by the licensing company. 

Liberated, which filed for Chapter 11 earlier this month, is looking for a liquidity cushion provided by a sale to help with expenses as it winds the business down. 

“Following growing financial challenges resulting from a series of macro and microeconomic pressures—including reduced retail foot traffic, ongoing inflationary pressures and high interest rates and the loss of some of [Liberated’s] licenses—the [company’s] liquidity position became severely constricted,” James Nelson, partner at financial advisory firm AlixPartners, said in a bankruptcy court filing this week. 

The comments were meant to serve as context for the challenges leading to Liberated’s bankruptcy. 

Having cash would help given Liberated had $3.3 million at the time of its bankruptcy filing. That was about enough to fund operations for a week. 

The company listed assets valued between $100 million and $500 million in bankruptcy papers. At least some of those assets include Captain Fin, which the company owned outright and did not license like so much of the rest of its portfolio. It’s unclear how much in revenue that business was generating, but it was smaller than many of the other brands Liberated licensed. 

Liberated bought the fin maker in 2022 and had plans to expand the hard goods company into a full lifestyle business with the reboot of an apparel collection. 

Nelson indicated prospective buyers were contacted informally about the sale and they hope media around the Chapter 11 will yield the “highest and best offers.” 

Interesting Parties

One or more stalking horse bidders would be selected to set the floor in an auction. They would be guaranteed a breakup fee and expense reimbursement of no more than 3 percent in total of the purchase price.  

All bids would be due by March 10. If there are two or more bids, an auction would be held on March 17, with a hearing to approve the buyer proposed for March 24. 

Possible suitors could include Bluestar Alliance, a brand management company that continues to snap up distressed assets where it can. 

Bluestar’s most recent buy was earlier this month when it acquired Palm Angels on undisclosed terms. 

The brand bills itself as a luxury streetwear label. Palm Angels joined Bluestar just a few months after the New York company bought Off-White from LVMH, also on undisclosed terms. 

Bluestar also owns Hurley, Tahari, Justice, Catherine Malandrino and Scotch & Soda among other brands.  

Another interesting prospect is Kandui Holdings, the Newport Beach investment company started by members of the Hurley family. That includes Bob Hurley, Jeff Hurley, Ryan Hurley and Chance King. 

Kandui bought Simple shoes and also started Florence Marine X with John John Florence. The latter appears to be gaining traction with two stores in Hawaii and one in Newport Beach. It makes the idea of buying what’s left of something associated with the past less attractive than continuing to forge a new path. After all, Kandui states on its website it’s, “Serving the next generation.”