LYCRA Company Files Prepackaged Chapter 11 to Eliminate $1.2 Billion in Debt

The LYCRA Company LLC, a Delaware limited liability company and global producer of fiber and technology solutions for the apparel and personal care industries, filed for prepackaged Chapter 11 bankruptcy protection on March 17, 2026, in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. The filing is supported by a Restructuring Support Agreement (RSA) entered into on March 13, 2026, with creditors holding or having the power to direct more than two-thirds of the claims under each class of prepetition debt. The RSA is designed to eliminate approximately $1.2 billion of funded debt obligations while providing more than $75 million in new capital to fund the company's operations during and following the proceedings.

The company reported revenue of approximately $724 million for fiscal year 2025 and carried approximately $1,533.9 million in total prepetition debt as of the petition date, with all debt instruments maturing by March 31, 2026. The company's chief financial officer submitted the declaration in support of the first day motions, providing the court with an account of the company's history, operations, financial condition, and proposed restructuring.

Company Background and Business Operations

The LYCRA Company traces its origins to 1958, when scientists at DuPont invented LYCRA® fiber, the original spandex (elastane) yarn. The fiber, which provides stretch and recovery properties, expanded from foundation garments and swimwear into hosiery, activewear, denim, and personal care products such as diapers and adult incontinence products. The company's products are sold to yarn processors and fabric mills, which incorporate the fibers into fabrics that are in turn supplied to garment manufacturers. The company does not itself manufacture apparel.

The company's brand portfolio comprises seven principal fiber lines: LYCRA® Spandex Fibers, LYCRA HyFit® Personal Care Fibers, LYCRA® T400® Stretch Fibers, COOLMAX® Performance Fibers, THERMOLITE® Insulation Fibers, ELASPAN® Elastomeric Fibers, and SUPPLEX® and TACTEL® Nylon Fibers. The company maintains and defends over 1,000 patents and applications comprising more than 100 unique patent families, along with approximately 2,400 trademarks protecting approximately 105 unique brands, marks, and logos.

The company operates approximately 2,000 employees across eight manufacturing facilities and eleven offices in North America, Europe, Asia, and South America. Manufacturing locations include facilities in Waynesboro, Virginia (321 employees); Monterrey, Mexico (345 employees); Paulina, Brazil (362 employees); Maydown, Northern Ireland (323 employees); Tuas, Singapore (a 90%-owned joint venture with 262 employees); Kerkrade, Netherlands (107 employees); Foshan, China (471 employees); Yinchuan, China (a 75%-owned joint venture with 292 employees); and 50%-owned joint ventures in Shiga, Japan and Taipei, Taiwan. Research and development is conducted at three labs located in Waynesboro, Virginia; Casaloldo, Italy; and Foshan, China.

In fiscal year 2025, the company recorded sales to customers in more than 80 countries. Approximately 57% of global sales were concentrated in four countries: China (29%), the United States (15%), Brazil (7%), and Italy (6%).

Corporate History and Ownership Transitions

In 2004, Koch Industries acquired DuPont's textiles and interiors business — including the LYCRA® spandex business — for approximately $4.4 billion, consolidating it under an entity called INVISTA. In January 2019, The LYCRA Company was acquired by Ruyi Textile and Fashion International Group Limited from Koch. In connection with that acquisition, the company incurred, among other obligations, a $400 million mezzanine financing arrangement.

In November 2019, nine months following the closing of the acquisition, the mezzanine borrower defaulted on the mezzanine financing. Negotiations between Ruyi and the mezzanine lenders continued through 2020 and 2021. In December 2021, the mezzanine lenders learned that Ruyi had allegedly transferred, or was about to transfer, certain of the company's Chinese assets — including onshore cash, plants, equipment, raw materials, and intellectual property — beyond the reach of creditors. Litigation in China arising from those alleged transfers remains ongoing across four separate proceedings.

In June 2022, the Netherlands Commercial Court approved a share pledge enforcement through which the mezzanine lenders took ownership of the company. In May 2023, the company executed a refinancing transaction that replaced earlier notes with new instruments, including a super senior term loan (originally $109 million, later upsized to $139 million) and new Euro Notes bearing interest at 16.000% per year, payable in kind. In January 2025, the post-enforcement shareholders entered into an agreement to sell the company to a Chinese state-owned enterprise, subject to conditions including regulatory approval by China's National Development and Reform Commission and the purchaser obtaining sufficient acquisition financing. By August 2025, it became apparent that the proposed sale would not be consummated, and on September 5, 2025, a further change of control occurred whereby ownership of the company was transferred to Eagle Holding Co B.V., a newly incorporated entity. The equity interests in Eagle Holding are held in trust by GLAS Trustees Limited for the benefit of the company's creditors.

Prepetition Capital Structure

As of the petition date, the company's funded debt consisted of four instruments, all sharing a March 31, 2026 maturity date. The prepetition secured debt is secured by substantially all of the debtors' assets and governed by an intercreditor agreement under English law. The agreed enforcement waterfall provides for repayment of the super senior term loan first, followed by the Euro Notes priority tranche, and then the Euro Notes non-priority tranche and Dollar Notes on a pari passu basis.

Events Leading to Bankruptcy

The company's financial condition deteriorated due to a combination of industry and company-specific pressures. Following disruptions caused by the COVID-19 pandemic, demand for apparel weakened, and the market saw capacity expansions by competitors, altering competitive dynamics. The company's manufacturing utilization rates declined from approximately 80% in mid-2024 to approximately 60% by the end of 2025. The declaration also cites intensifying competition from low-cost manufacturers, particularly in Asia, placing downward pressure on pricing; generic spandex prices fell to near cash-cost levels. In the personal care segment, the market for baby diapers softened and fragmented, with private-label products gaining market share.

The company's EBITDA declined from approximately $132 million in 2024 to a projected $44 million for 2026. The company also incurred costs in connection with managing its capital structure, including refinancing efforts and restructuring transactions.

An additional liability arose from a take-or-pay supply agreement entered into in July 2023 with HELM US Corporation for the purchase of QIRA, a bio-derived feedstock produced by Qore, LLC — a joint venture between Cargill, Incorporated and HELM — intended for use in producing bio-derived spandex fibers. The declaration states that production of QIRA was delayed beyond the originally anticipated start-up date, reducing any potential market advantage from early production of bio-derived spandex, and that broader industry conditions rendered the volume commitments in the agreement unsustainable. The company determined the agreement was not economically viable.

Beginning in December 2025, the company initiated discussions with HELM to restructure the supply agreement. Negotiations culminated in a settlement agreement and mutual release among the company, HELM, and Qore providing for termination of the supply agreement in exchange for a settlement payment of $4.75 million — including $750,000 in respect of existing payables owed to HELM — and a license agreement under which certain of the debtors granted HELM and Qore a non-exclusive license to certain patents related to QIRA. The declaration states that HELM has alleged potential rejection damages exceeding $100 million under the supply agreement.

The Restructuring Support Agreement and Prepackaged Plan

Following the failure of the proposed third-party sale, the company and its creditor groups continued negotiations. On January 9, 2026, the Euro Notes ad hoc committee delivered an Alternative Restructuring Notice under the existing lock-up agreement. On March 12, 2026, the Euro ad hoc group issued a notice of termination of the lock-up agreement, which terminated that date. On March 13, 2026, the company and the RSA parties entered into the RSA.

The RSA parties hold or have the power to direct more than two-thirds of the claims under each class of prepetition debt: 100% of the super senior term loan claims, 100% of the Euro Notes claims, more than 83% of the Dollar Notes claims, and more than 90% of the Promissory Note claims, in each case also representing more than 50% of the holders in that class.

The company commenced solicitation of votes on the prepackaged plan on March 16, 2026. Voting is scheduled to conclude on or about April 17, 2026. A hearing to approve the adequacy of the disclosure statement and confirm the plan is targeted for on or about April 24, 2026, and no later than 60 days after the petition date. Plan effectiveness and emergence from Chapter 11 is targeted within 75 days of the petition date, extendable to 90 days.

Treatment of Claims and Interests

DIP Financing

To fund operations during the case, the company secured a $75 million debtor-in-possession notes facility bearing interest at 9.00% per annum, payable in kind, and secured by substantially all of the debtors' assets with superpriority administrative claim status. The facility is structured in two tranches: $50 million available following entry of an interim DIP order, and an additional $25 million upon entry of a final DIP order.

Prior to filing, the company and its advisors contacted eleven potential third-party DIP lenders, two of which executed confidentiality agreements. No third party offered financing on terms acceptable to the company and its key stakeholders. The declaration states that without access to the DIP facility, the company projected a liquidity shortfall within the first week of the proceedings.

First Day Relief Requested

Contemporaneously with the petition, the company filed first day motions seeking authority to: pay prepetition wages, salaries, and employee benefits for approximately 2,000 employees, totaling approximately $24 million; maintain and pay insurance, surety bonds, and letters of credit; continue existing customer programs including discounts, rebates, and refunds; pay all trade claims in the ordinary course; continue its existing cash management system and intercompany transactions; remit and pay taxes and fees; provide adequate assurance for utility services through a proposed deposit of $290,945.47, representing approximately 50% of average monthly utility payments over the preceding twelve months; enforce the worldwide automatic stay; and obtain joint administration of the 26 debtor entities.

The company's corporate structure at the time of filing includes 43 entities, 26 of which are debtors in the prepackaged cases, incorporated across Brazil, China, Germany, Hong Kong, India, Italy, Japan, Jersey, Mexico, the Netherlands, Singapore, South Korea, Spain, Switzerland, Taiwan, Turkey, the United Kingdom, and the United States.

This article was prepared using Research Suite by Stretto, the gold standard for bankruptcy research. Research Suite by Stretto was able to create this summary of a 189 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Research Suite by Stretto may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.