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On Wednesday, while most of the world was concerned with some much more shocking, impactful news, Los Angeles-based retailer Nasty Gal filed for Chapter 11 bankruptcy protection in the Central District of California.
The news comes 10 years after founder and self-described #GirlBoss Sophia Amoruso launched the company, which started as an eBay shop and became one of the fastest-growing e-commerce startups around, heralded as a retail game changer. Now, Amoruso's rags-to-riches tale has hit a snag.
"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," said CEO Sheree Waterson in a statement. "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 Amoruso plans to resign as executive chairwoman, a role she took on last year after stepping down as CEO, though Nasty Gal has yet to confirm this. The company did say in a release that it has been "exploring strategic partnerships with other strong brands and will continue to explore these options throughout the restructuring process," and that it "expects to attract a new equity partner or sponsor to take the company forward with a healthy balance sheet."
The news follows a seemingly tumultuous couple of years for the brand. WWD reported in September that it was "aggressively looking for capital" and maybe even considering a sale of the business. In February, the company laid off 10 percent of its staff. Nasty Gal has also repeatedly come under fire for knockoffs, discrimination, wrongful termination and other reports of a "toxic" working environment. According to Forbes's estimates, the company surpassed $300 million in revenue in 2015.
Meanwhile, as Amoruso has pulled back from Nasty Gal's day-to-day operations, things seem to be going well for her: Last month, she released her second book, "Nasty Galaxy," and in June she made Forbes's list of America's Richest Self-Made Women with an estimated net worth of $280 million. At 32, she's the second-youngest on the list, just after Taylor Swift.
Update, Nov. 16: Nasty Gal has been approved to tap into a $20 million loan from Hercules Technology Growth Capital Inc., according to WWD. Nasty Gal asked a judge last week to expedite approval of the money for expenses such as payroll and inventory with which to stock its site and two physical stores until the bankruptcy court makes a final ruling next month.
This article was updated to include additional information provided by Nasty Gal.