The LYCRA Company: Prepackaged Plan to Eliminate $1.5 Billion in Debt

The LYCRA Company, the global fiber and technology solutions provider behind spandex and a portfolio of textile brands dating to 1958, filed a prepackaged chapter 11 case in the Southern District of Texas on March 17, 2026 to eliminate approximately $1.534 billion in funded debt. The company reported revenue of approximately $724 million for fiscal year 2025, but its capital structure — inherited from Shandong Ruyi's $2.6 billion leveraged acquisition in 2019 — left it carrying more than twice its annual revenue in funded debt. Twenty-six affiliated entities filed jointly under an RSA with nearly unanimous creditor support. The debtors entered with a plan, disclosure statement, and $75 million DIP commitment on day one, filing six days ahead of the RSA's March 23 milestone and targeting emergence within 45 days.

Under the prepackaged plan, the company's ~$214 million senior secured term loan lenders receive 100% of the new equity in reorganized LYCRA Holdco, while holders of ~$520 million in Euro Notes and ~$780 million in Dollar Notes receive only warrants. General unsecured creditors are unimpaired. Existing equity — held by the creditor consortium that took control from Shandong Ruyi in 2022 — is cancelled with no recovery.

Debtor(s)	The Lycra Company LLC (26 jointly administered entities)
Court	U.S. Bankruptcy Court, Southern District of Texas (Houston Division)
Case Number	26-90399
Petition Date	March 17, 2026
Judge	Hon. Christopher M. Lopez
Plan Type	Prepackaged Plan of Reorganization
FY2025 Revenue	~$724 million
Employees	~2,000 across 15 countries
DIP Facility	$75 million superpriority senior secured DIP notes ($50M interim, $25M final); 9.00% PIK; agent: GLAS USA LLC

From Koch Industries to Creditor Control

The LYCRA brand dates to 1958, when DuPont invented the original spandex yarn. The business later became part of INVISTA, a Koch Industries subsidiary, which operated a portfolio of fiber and technology brands — LYCRA, COOLMAX, THERMOLITE, ELASPAN, SUPPLEX, TACTEL, and TERATHANE — serving apparel manufacturers worldwide. The company is not itself an apparel manufacturer; it innovates fiber technology and sells fibers to mills, which supply fabric to garment makers. At the time of the 2019 sale, the business operated across 14 countries with approximately 3,000 employees.

Today the company operates eight manufacturing and processing facilities — including two majority-owned joint ventures — and two additional 50%-owned joint ventures across nine countries, plus eleven offices and a distribution hub globally. Its intellectual property portfolio includes over 1,000 patents and applications, more than 2,300 registered trademarks, and nearly 250 unique logos and brands. In addition to the flagship LYCRA fiber, the company markets LYCRA HyFit and LYCRA T400 fibers alongside the COOLMAX and THERMOLITE performance brands. The workforce has contracted from approximately 3,000 employees at the time of the 2019 acquisition to approximately 2,000 at the petition date.

On January 31, 2019, Shandong Ruyi Investment Holding completed its acquisition of INVISTA's Apparel & Advanced Textiles business for approximately $2.6 billion. The deal was financed with roughly $1 billion in debt, including a $400 million mezzanine notes facility. ITOCHU Corporation participated as a co-investor.

By May 2019 — three months after closing — Shandong Ruyi defaulted on the $400 million acquisition financing. The default reflected broader financial distress at Ruyi Group, which had taken on debt for leveraged acquisitions of luxury brands including Aquascutum and SMCP Group. In June 2022, creditors completed a process to take full equity control of The LYCRA Company. The new owners — Hong Kong-based China Everbright, Tor Investment Management, and Seoul-based Lindeman Partners — stated they had implemented steps to insulate the company from its former shareholder's financial distress.

EBITDA Decline and Filing Triggers

Despite the 2022 ownership change, the company's financial performance continued to deteriorate. The First Day Declaration filed by CFO Dean Williams reports that EBITDA fell from approximately $132 million in 2024 to a projected $44 million for 2026 — a 67% decline. On $724 million in FY2025 revenue, that trajectory implied EBITDA margins compressing from roughly 18% to just 6%, leaving the company unable to service $1.534 billion in funded debt. Manufacturing utilization rates dropped from approximately 80% in mid-2024 to approximately 60% by end of 2025, and generic spandex prices were driven toward cash-cost levels.

The anticipated post-COVID consumer demand rebound in key Western markets failed to materialize. Producers throughout the supply chain destocked, suppressing fiber demand. Competitors — particularly low-cost manufacturers in Asia — expanded capacity, eroding market share and depressing pricing. In the personal care segment, the baby diaper market softened and fragmented as private-label products gained share. Tariff volatility, inflation, and fluctuating commodity prices for energy and raw materials added further cost pressure.

HELM supply agreement. A separate operational liability contributed to the filing: the company had entered into a "take-or-pay" supply agreement with HELM US Corporation for bio-derived spandex materials that became unsustainable due to lower-than-expected demand and production delays. Potential rejection damages were alleged to exceed $100 million. The debtors filed an emergency motion to authorize pre-assumption performance of a settlement agreement and license agreements with HELM and Qore, LLC, with the underlying contracts — including a supply contract, trademark license agreement, and patent license agreement — filed under seal.

China litigation. Ongoing proceedings regarding the "Foshan JV" created material risk, including the potential requirement to transfer assets worth RMB 574 million and significant liquidated damages exposure. The litigation diverted management attention and discouraged potential capital providers.

Capital Structure and Intercreditor Waterfall

The company carried approximately $1.534 billion in prepetition funded debt, all maturing March 31, 2026:

The entire secured capital structure matured on March 31, 2026. All three secured facilities — the ssTL, Euro Notes, and Dollar Notes — carry payment-in-kind interest, meaning the principal balances grew steadily.

Intercreditor waterfall. The prepetition secured debt is secured by substantially all debtor assets. Enforcement proceeds distribute in the following priority: (1) repayment of the ssTL; (2) repayment of the Euro Notes Priority Tranche ($120 million); (3) repayment of the Euro Notes Non-Priority Tranche and Dollar Notes, which rank pari passu.

Linx Capital securitization. Linx Capital Limited, a non-debtor Jersey SPV unaffiliated with the company, issued 1L Linx Notes (15.20%) and 2L Linx Notes (20.00%) to subscribe for the Euro Notes issued by Eagle UK Finance, allowing the company to upstream funds to refinance the original 2019 acquisition notes.

DIP Notes and Exit Financing

The debtors secured commitments for $75 million in DIP financing structured as superpriority senior secured notes under a DIP Note Purchase Agreement. The DIP motion authorized $50 million on an interim basis, with $25 million available after final approval. DIP notes bear interest at 9.00% per annum (PIK), increasing to 14.00% upon maturity extension. GLAS USA LLC serves as DIP agent.

The DIP provides super-priority administrative expense status under section 364(c)(1) and grants adequate protection liens to prepetition secured parties for diminution in value. DIP termination events include maturity date occurrence, unauthorized plan filings, milestone failure, termination of the Lock-Up Deed, and events of default under the DIP Note Purchase Agreement. Upon emergence, New LYCRA Holdco will issue a $10 million junior unsecured promissory note to DIP Noteholders as a DIP Exit Premium.

Exit financing. The company secured commitments for at least $75 million in exit notes, plus an uncommitted $25 million incremental facility, to refinance the DIP and fund post-emergence operations. DIP Noteholders may opt to receive cash or notes under the exit facility. The exit terms are filed under seal.

Prepackaged Plan and Creditor Recovery

The plan and disclosure statement were filed on the petition date, with an emergency motion for a combined disclosure statement approval and confirmation hearing.

ssTL lenders (Class 3, ~$214M). The first-priority term loan lenders receive their pro rata share of 100% of New LYCRA Holdco Notes and 100% of New LYCRA Holdco Common Stock — making them sole owners of the reorganized business. Distribution is conditioned on executing a New LYCRA Holdco Investor Agreement.

Euro Noteholders (Class 4, ~$520M). Linx Capital Limited, the securitization SPV, receives warrants: the Priority Tranche (~$120M) receives 95% of Class A2 Warrants; the Non-Priority Tranche receives 5% of Class A2 Warrants plus 100% of Class A3 Warrants.

Dollar Noteholders (Class 5, ~$780M). Holders receive their pro rata share of 100% of Class B Warrants.

Promissory Note (Class 6, ~$19M). Holders receive pro rata share of $1,000 total.

General unsecured creditors (Class 7). Unimpaired — claims are reinstated and paid in the ordinary course.

Intercompany claims and interests (Classes 9–11). Reinstated, adjusted, converted, or cancelled as needed to implement the restructuring — these are administrative in nature and do not affect third-party creditor recoveries.

Existing equity (Class 12). Cancelled with no distribution to China Everbright, Tor Investment Management, or Lindeman Partners.

The RSA was executed on March 13, 2026, with parties holding more than two-thirds of claims in each class of prepetition debt. Solicitation of votes commenced March 16, 2026, with a voting deadline of approximately April 17, 2026.

First Day Relief and Operational Continuity

The debtors filed fourteen first day motions on March 17, 2026, securing court authorization to maintain business operations without disruption. Key relief included authorization to pay all prepetition trade claims in full, ensuring that suppliers and vendors across the global supply chain would continue to be paid in the ordinary course. The court also authorized continued payment of employee wages, salaries, and benefits — protecting approximately 2,000 employees in 15 countries.

Additional first day relief covered maintenance of the company's existing cash management system, continuation of customer programs, payment of prepetition taxes, maintenance of insurance and surety coverage, and enforcement of the worldwide automatic stay. The case was designated as a complex chapter 11 matter, and the court approved joint administration of all 26 debtor entities — spanning the United States, the Netherlands, the United Kingdom, Singapore, Hong Kong, Taiwan, Switzerland, Brazil, and Mexico.

Key professionals. CEO Gary Smith and CFO Dean Williams lead the debtors through the restructuring. Linklaters LLP serves as lead counsel, with Haynes and Boone, LLP as local Texas counsel. Houlihan Lokey is the investment banker, FTI Consulting serves as financial and communications advisor, and Kroll Restructuring Administration LLC was retained as claims agent.

Key Timeline

Frequently Asked Questions

What happened to The LYCRA Company?

The LYCRA Company filed a prepackaged chapter 11 case on March 17, 2026 in the Southern District of Texas to eliminate approximately $1.534 billion in funded debt. The company — which reported $724 million in FY2025 revenue — entered with an RSA supported by more than two-thirds of each class of prepetition secured debt, and expects to emerge within 75 to 90 days.

Why did LYCRA file for bankruptcy?

The company's capital structure, inherited from Shandong Ruyi's $2.6 billion leveraged acquisition in 2019, carried approximately $1.534 billion in debt — all maturing March 31, 2026. EBITDA fell from ~$132 million in 2024 to a projected ~$44 million for 2026 due to demand softness, competitor capacity expansion, margin compression, and macroeconomic headwinds. Additional triggers included a take-or-pay supply agreement with HELM with potential rejection damages exceeding $100 million and ongoing China litigation regarding the Foshan JV.

Who will own LYCRA after bankruptcy?

Under the plan, the senior secured term loan lenders (~$214 million in claims) receive 100% of the new common equity in reorganized LYCRA Holdco. Euro Noteholders and Dollar Noteholders receive warrants. Existing equity held by China Everbright, Tor Investment Management, and Lindeman Partners is cancelled.

How much revenue does LYCRA generate?

The LYCRA Company reported approximately $724 million in revenue for fiscal year 2025, operating eight manufacturing facilities and two joint ventures across nine countries with approximately 2,000 employees. Despite the revenue base, EBITDA compression to a projected $44 million for 2026 made the $1.534 billion debt load unsustainable.

Will LYCRA products still be available?

The company stated that customers, suppliers, and its approximately 2,000 employees will not be affected. Operations continue in the ordinary course, and the court authorized payment of all trade claims in full.

Who is the claims agent for The LYCRA Company?

Kroll Restructuring Administration LLC serves as the claims, noticing, and solicitation agent.

For more bankruptcy case coverage, visit the ElevenFlo bankruptcy blog.