One of Southern California’s largest fashion names is seeking bankruptcy protection after racking up almost $94 million in debt during an ambitious expansion drive.
Rampage Clothing Co. and Rampage Retailing Inc., which have the same owner but are separate companies, filed for Chapter 11 protection last week.
The privately held Rampage companies, which manufacture and sell young women and children’s clothing, fell into trouble after the retail division began expanding to more sites and larger stores.
“There were some issues that they were too quick on the expansion of their retail stores,” said Victoria Kaufman, a bankruptcy attorney for Rampage. “It’s an issue of timing and the costs related to the expansion. The problems on the retailing side then impacted the manufacturing side.”
Rampage owns about 50 stores nationwide operated under the Judy’s, Rampage and Friends names. The company had been in the process of converting existing Judy’s retail sites into Rampage stores, Kaufman said.
Ironically, Rampage had rescued the Judy’s apparel chain from bankruptcy in 1993 by acquiring the company. Previously, Rampage had been one of Judy’s major suppliers.
“The rapid expansion of Rampage and Friends retail stores in conjunction with the attendant construction costs adversely affected the company’s liquidity,” according to a company statement. “In addition to evaluating its retail stores, Rampage is utilizing its reorganization to focus on its core business, significantly reduce overhead and improve product lines.”
Rampage Clothing has assets totaling $54.1 million and liabilities of $61 million. Rampage Retailing has $23.5 million in assets and close to $33 million in liabilities. Each company has more than 100 creditors.
CIT Group/Commercial Services is Rampage’s biggest secured creditor. It is owed more than $27 million from the two divisions. Executives at the company would not comment about Rampage’s bankruptcy filing.
Kaufman said Rampage had tried to avoid bankruptcy but that its efforts fell through.
“They had tried for an out-of-court restructuring, but at a certain point, when creditors are suing, it becomes unworkable,” Kaufman said.