A bankruptcy filing by Chip Childware has thrown into disarray the fate of its former owner, Tyler Derd, the former CEO of the popular fashion and fashion accessories brand.
Derd and his wife, Cheryl, filed for bankruptcy protection earlier this month in a filing with the U.S. Bankruptcy Court for the District of Columbia, the Washington Business Journal reported.
The bankruptcy filing is likely to create further turmoil for the family’s fashion empire and its flagship fashion retailer, which was founded in 1982 by the Dells.
Chip Childwear has a history of financial problems and the bankruptcy filing could trigger a series of events that could shake up the brand’s leadership and lead to the loss of the Dell brand, which has been a mainstay in the fashion industry for nearly 40 years.
“The filing is significant in that it puts an end to one of the most turbulent and challenging periods in the brand over the past 40 years,” said David C. Schiller, senior vice president at the Consumer Products Council, a trade group.
“It is also an indication of how important it is for Chip to have a plan and that it is now clear that it has a plan.”
Derd, who owns 80 percent of the company, has been struggling financially since he sold the company to a private equity group in 2015.
During the bankruptcy process, Chip issued $3.3 billion in debt to creditors, including a $3 billion mortgage on the company’s former headquarters.
He also made payments on a $1.3 million personal loan to his wife and daughter, and an additional $2.4 million for a mortgage on their home.
Derd’s wife, Cherie, has filed for divorce, citing their growing financial burdens as well as a growing number of financial and medical issues.
The couple said they were unable to pay child support because they were forced to work overtime to support their two children, Tyler, now 22, and Caitlyn, 11.
In a statement on its website, Chip Child Wear said the bankruptcy would be a “major setback” for the brand.
“We are pleased to be able to complete this chapter of our business and return to business,” the company said.
“Our goal is to return the family to a business that continues to generate positive buzz and revenues and provide a positive business environment for our employees.”
The company has not disclosed the amount of debt it owes to creditors or the amount owed to the Bankrupt Enterprises Protection Fund.