Banks Journal is seeking court approval to move forward with liquidation under Chapter 7 bankruptcy, about a week after the company abruptly announced the label’s closure.
The company filed its petition to the U.S. Bankruptcy Court for the Central District of California on Tuesday, citing $9.93 million in assets and $9.63 million in liabilities.
Among the list of creditors with unsecured claims are former employees in Orange County, Hawaii and other places.
That includes co-founders Rama McCabe and Motoo Noda, along with Jeff Moore. Moore is the former Reef global brand president, who was brought in earlier this year to be interim CEO as the company sought to push through setbacks stemming from the pandemic. He left the company in September.
The business, like many others, was grappling with excess inventory following a surge in e-commerce during the pandemic that did not continue once conditions normalized.
“Our brand is as strong as it has ever been,” McCabe, who was serving as CMO, told SES in an April interview. “There are just some issues as far as forecasting stock levels. There are things that come up and, unless you have someone in the business that has led a brand before, these are new challenges and new learnings. So, it’s been an adventure, and there are things I’ll never do again.”
McCabe first announced news of the business closing to the brand’s Instagram followers, saying Oct. 13 would be the final day of operations. No reason was given for the closure.
On Tuesday, the company sent an email to customers saying Banks Journal’s EU online shop continues to operate and is now shipping to the U.S. Some retailers, such as Tilly’s Inc. and Huckberry, now have the label’s product on markdown online as they look to clear through the inventory.
Banks Journal’s distributor in Japan owns a majority stake in the business at nearly 45%, according to court documents. Co-founders Noda, the company’s CFO, along with McCabe and Tim Cochran, who was no longer with the company at the time of the filing, are also listed as shareholders (with stakes of 18.69%, 7.35% and 5.9%, respectively).
The Critical Slide Society, where McCabe once worked, is listed as a shareholder in the filing with a 1.39% stake.
Kari Hamanaka can be reached at kari@shop-eat-surf-outdoor.com.
