The parent company of the Salt Life retail store chain filed for Chapter 11 bankruptcy, with plans to sell the brand in a court auction.
Duluth, Georgia-based Delta Apparel Inc. filed its Chapter 11 petition June 30 in U.S. Bankruptcy Court for the District of Delaware.
Before filing for bankruptcy, Delta agreed June 28 to sell Salt Life to FCM Saltwater Holdings Inc. for $28.03 million.
The sale is subject to a higher offer made in a bankruptcy court auction.
The three Salt Life Food Shack restaurants in Northeast Florida are not owned by Delta.
Delta acquired the Salt Life apparel brand, founded in Jacksonville Beach in 2003, for $37 million in 2013.
Delta expanded the store chain, which now consists of 28 locations including its flagship store in Jacksonville Beach.
The company said in October 2023 it received an unsolicited offer from an unidentified party to buy Salt Life.
Delta said at the time its board of directors of directors would evaluate that offer. But in a bankruptcy court filing, it said its investment banker contacted 181 potential purchasers of Salt Life in October.
The company had meetings with four potential purchasers in early 2024 and received updated bids from two parties in February, including FCM.
Negotiations stalled but Delta engaged a new investment adviser to restart the sale process about six weeks before the Chapter 11 filing.
Besides Salt Life, the company sells apparel under the Delta and Soffe brands.
Delta’s most recent financial report showed an adjusted net loss of $24.2 million for the six months ended March 31, with sales falling 27% to $158.9 million.
Salt Life’s sales fell 12% to $25.9 million.
According to a court filing, “a combination of reduced demand and difficulties obtaining raw materials have resulted in declining liquidity that Delta’s Board has been unable to counteract, despite their best efforts.”
Since the end of its second quarter, “Delta has continued to experience a deteriorating liquidity position and has been unable to raise additional capital to fund operations,” it said.
“The Debtors’ goal in these Chapter 11 Cases is the maximization of estate value through a sale of the business as a going concern, preserving value for the Debtors’ creditors, employees and other parties-in-interest,” it said.
The auction for Salt Life, if other bidders emerge, is scheduled for Aug. 20.