Sean John is back in court for at least the third time this year after the streetwear label that rapper-cum-business mogul Sean Combs founded more than two decades ago filed for bankruptcy Wednesday.
Now, Combs, known by his P.Diddy persona, is hoping a $3.3 million bid will be enough to regain ownership of the brand he birthed in 1998’s Y2K heyday when hits like “I’ll Be Missing You,” the Notorious B.I.G. tribute he created with singer Faith Evans, still ruled the charts.
The Harlem native, who also goes by Diddy and Puff Daddy, submitted the stalking-horse bid with a Manhattan bankruptcy court through SLC Fashion LLC. Mark Caldwell, chief financial officer for GBG Sean John LLC, described the culturally savvy label as among the crown jewels of bankrupt parent GBG USA, which has sold off Aquatalia, Ely & Walker and Tahari since filing for Chapter 11.
“While Sean John was initially created as a men’s sportswear collection, it has since expanded to a full lifestyle brand with the inclusion of multiple product categories including tailored suiting, dress shirts, eyewear, children’s wear, fragrances, time pieces, outerwear, cold weather accessories, headwear, and footwear,” Caldwell stated in court documents. “Since its founding, Sean John has entered into numerous lucrative partnerships, including an exclusive distribution agreement with Macy’s department store, and marketing partnerships with the National Basketball Association.”
Though Sean John was not a party to GBG USA’s initial filing because of a joint venture technicality, the bankrupt brand manager had always intended to sell the streetwear label as part of its own Chapter 11 petition, Caldwell said.
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Sean John’s latest brush with the courts comes after Combs filed two lawsuits this year against GBG Sean John USA centered on publicity rights and a trademarked slogan. The “It’s All About the Benjamins” hitmaker sold the majority of his streetwear label Sean John to brand management agency CAA-GBG in 2016.
This latest legal turmoil follows GBG USA owner Global Brands Group Holding Ltd.’s July bankruptcy petition in Bermuda. Although it had hoped to complete a financial restructuring, the holding company ultimately decided to liquidate after it failed to secure its lender’s backing.
According to court documents, Sean John’s $500 million to $1.0 billion in assets pale in comparison to $1.0 billion to $10 billion in liabilities. Landlords hoping to get what they’re owed in rent number among the unsecured creditors. Kenneth Cole Productions Inc. of Secaucus, N.J. is owed $6 million in royalties and New York City’s Authentic Brands Group (ABG) is hoping to recoup nearly $3.6 million in royalties. These two top trade creditors, with identical amounts owed, also appear on the GBG USA petition.
Companies in the licensing business have had a tough go of it throughout the coronavirus pandemic. GBG sold much of its North American licensing business for $1.2 billion in 2018 to Differential Brands Group, which rebranded as Centric Brands before filing for Chapter 11 last year and subsequently restructuring months later in October 2020. Sequential Brands finally collapsed into bankruptcy in August, and has sold off brands including Jessica Simpson and William Rast. Iconix Brand Group, yet another brand management rival, sold in June to private equity firm Lancer Capital for $585 million.
Authentic Brands Group, by contrast, has managed to buck the trend. While its peers have fallen on hard times, the Nautica owner has been on a spending spree, acquiring Brooks Brothers, Lucky Jeans and Eddie Bauer during the pandemic and on track to officially own Reebok early next year. BCBG owner Marquee Brands has also seemed to survive the recent disruption, thanks in large part to private equity firm Neuberger Berman’s financial support.