The Lycra Company, the maker of spandex and other stretch fabrics, has filed for Chapter 11 bankruptcy protection in Houston, TX, seeking to shed $1.2 billion in debt. The company, in court papers, blamed the bankruptcy on a “confluence” of factors, including the pandemic’s fallout, tariffs, increased competition, and ongoing legal issues.

The company’s lenders agreed to ‌provide $75 million in new financing and to eliminate most of the company’s $1.53 billion in existing debt, according to court filings. Customers, suppliers and the company’s 2,000 employees will not be affected, according to the filing.

Lycra said the prepackaged plan reflects a consensual agreement reached after several months of productive discussions with key financial creditors. Given the near-unanimous support of its stakeholders, the company expects to complete its financial restructuring expeditiously and emerge from the Chapter 11 process within 45 days.

Bankruptcy Causes
The filing comes after years of an unsteady financial footing for the Delaware-based company, following its 2019 acquisition by Chinese textile operation Shandong Ruyi Textile and Fashion International Group Limited, according to an affidavit supporting first-day motions filed by Dean Williams, Lycra’s CFO since 2019. The previous owner had been Koch Industries, Inc.

In addressing “Prepetition Challenges” that led to the need for a debt restructuring, Williams said Lycra “has faced significant and persistent financial difficulties due to a confluence of industry headwinds: since the Ruyi acquisition.

He wrote, “The global spandex and apparel industries have experienced prolonged periods of weakening demand and soft sales trends, beginning with the disruptions caused by the COVID-19 pandemic, which resulted in extended market closures, supply chain disruptions, and reduced consumer demand. Although demand partially recovered following the easing of pandemic restrictions, the anticipated rebound in key Western markets did not materialize as quickly as expected.”

Williams wrote that over the last several years, demand from mills has remained weak as most producers have focused on destocking and reducing inventory levels throughout the supply chain, while “market uncertainty persisted in a higher interest rate and inflationary environment” has led to subpar ordering patterns. Williams wrote, “The industry has also experienced significant capacity expansions by competitors, altering the competitive dynamics and leading to decreased utilization rates across the company’s manufacturing facilities, from approximately 80 percent in mid-2024 to approximately 60 percent by the end of 2025, as the company was forced to curtail production to control inventory levels in response to softening demand.”

At the same time, Lycra has faced “intensifying competition” from low-cost manufacturers, particularly in Asia, which has placed pressure on pricing and eroded market share in certain segments. The CFO wrote, “Generic spandex prices have fallen to near cash-cost levels, compressing margins across the industry. In the personal care segment, the market for baby diapers has both softened and fragmented, with private-label products gaining market share, and increased pricing pressure from lower-cost Asian competitors affecting both volume and price.”

Williams further wrote in the affidavit that recent macroeconomic uncertainties, particularly U.S. tariffs, trade policy shifts and inflation, have further compounded those challenges.

“Tariff volatility and uncertainty and changing trade policies have created significant uncertainty throughout the value chain, causing brands to adopt cautious ordering practices and conservative inventory management strategies,” said Williams. “These effects have cascaded through the supply chain, with particularly acute impacts in South Asia and Central America. Fluctuating raw material costs and inflationary pressures have also strained the company’s margins, while the lingering effects of COVID-19-related supply chain disruptions—including high garment inventory levels throughout the global value chain — have continued to suppress demand for fibers. Additionally, fluctuating commodity prices, particularly for energy and raw materials essential for spandex production, significantly raised the company’s operational costs.”

Finally, the company also incurred substantial costs in managing its capital structure, including through refinancing efforts and the various restructuring transactions. In 2022, Shandong Ruyi’s creditors took full control of the company’s equity after the parent group defaulted on a $400 million loan. Those creditors included Hong Kong-based China Everbright Ltd., Tor Investment Management and Seoul-based private equity firm Lindeman Partners, along with its affiliate, Lindeman Asia.

Williams said as a result of these factors, Lycra’s EBITDA declined from $132 million in 2024 to a projected EBITDA of $44 million for 2026. He wrote, “These industry-wide and company-specific pressures have collectively contributed to the deterioration of the company’s financial performance and the urgent need for the restructuring contemplated by these Prepackaged Cases.”

Other factors contributing to the move to bankruptcy court included ongoing litigation risks in China and a failed 2025 attempt to sell the company. Also playing a role in the restructuring was Lycra’s agreement to pay $4.75 million, including $750,000 to settle outstanding payables, to terminate its partnership with Qore, a joint venture between Cargill and HELM AG, to produce sustainable spandex. Wiliams said due to delays and broader industry headwinds, the contract was “not economically viable.”

Bankruptcy Steps
Lycra is seeking standard “first day” relief from the court to allow it to continue regular business operations throughout the restructuring period. As part of these initial motions, the company intends to continue paying all valid debts owed to suppliers and vendors in full during normal business activities.

Lycra said the restructuring support agreement (RSA) has seen “overwhelming support” from holders of the company’s senior secured term loan, 16.0 percent senior secured notes, and 7.5 percent senior secured notes, who have agreed to vote in favor of a prepackaged plan of reorganization.

“The Lycra Company’s products have long been a symbol of quality, delivering benefits like lasting comfort, fit, and performance across a wide variety of apparel and personal care applications,” said Gary Smith, CEO, Lycra, in a statement. “Today marks a significant milestone for The Lycra Company as we are taking decisive action to meaningfully reduce our debt and strengthen our financial foundation. By taking this step, we will continue serving our customers, supporting our partners, and providing the high-quality products on which they rely. I want to thank our team members for their ongoing dedication and our loyal customers and partners for their continued support throughout the process.”

Headquartered in Wilmington, DE. Lycra develops fiber and technology solutions for the apparel and personal care industries. Its consumer fiber brands include Lycra, Lycra HyFit, Lycra T400, Coolmax, Thermolite, Elaspan, Supplex, and Tactel. Revenues reached $724 million for fiscal year 2025.

The company, founded in 1958 as part of DuPont de Nemours, Inc., was the original producer of spandex and remains one of the world’s leading spandex innovators, according to the company. It has eight manufacturing facilities, three research labs and 11 offices across North America, Europe, Asia, ​and South America, with 2,000 employees worldwide.

The case ​is listed as The Lycra Company LLC, U.S. Bankruptcy Court for the Southern District of Texas, No. 26-90399.

Image courtesy Lycra