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Frederick's of Hollywood closes stores, files for bankruptcy

Mall shoppers in New Hampshire and around the country will no longer be able to find any Frederick's of Hollywood stores as the company has filed for bankruptcy and closed all of its brick-and-mortar locations. On April 19, Frederick's of Hollywood Group Inc. filed for Chapter 11 bankruptcy in Wilmington, Delaware. The company listed $36.5 million in assets and $106 million in debt.

Founded in 1947, Frederick's of Hollywood operated a chain of women's lingerie stores around the country. According to its website, the company was the first major retailer in the U.S. to sell thong underwear and push-up bras. At its peak, the company had 200 stores. The 94 stores that remained before the Chapter 11 bankruptcy filing were all shuttered. Competition, less consumer spending and the popularity of online shopping have all been blamed for the steady decline in sales at Frederick's stores that began in 2008.

Frederick's is expected to sell all of its inventory, intellectual property and e-commerce operations to Authentic Brands Group LLC for $22.5 million and 25 percent of the future revenue. Authentic Brands will then run the company as an online-only retailer. Before the sale is official, Frederick's will conduct an auction to see if there are any other offers.

When a company is rapidly losing money, filing for a business bankruptcy can sometimes be the best option. However, companies can sometimes use bankruptcy to restructure debts without going out of business. The owners of companies that are in a lot of debt and experiencing declining sales might want to consult an attorney about what alternatives they have.

Source: Bloomberg, "Frederick's Seeks Bankruptcy After Closing Lingerie Stores", Michael Bathon and Phil Milford, April 20, 2015

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