La Senza, the lingerie brand previously owned by Victoria’s Secret owner L Brands and sold to Regent LP in 2018, is now facing bankruptcy due to multiple suppliers filing an involuntary bankruptcy petition against the company. These suppliers claim that La Senza has failed to fulfill its obligations.

The first petition was filed by MGF Sourcing US, owned by private equity firm Sycamore, along with two other La Senza suppliers, in Delaware on January 24, 2020. It has been revealed that MGF played a crucial role in La Senza’s sale to Regent, with the deal depending on MGF continuing to source products for the brand. To ensure this collaboration, La Senza agreed to secure a letter of credit, guaranteeing payment for goods from the supplier. However, it seems that La Senza failed to produce this document. As an alternative, the brand agreed to deposit millions of dollars in an escrow account to ensure payment for goods sourced by MGF. Unfortunately, La Senza has failed to make any of the required payments.

Despite the payment issues, MGF continued to ship goods to La Senza as the brand was not significantly behind on payments and its financial situation did not indicate insolvency. However, in October 2019, La Senza failed to pay for around $10 million worth of goods from MGF. Despite the supplier’s demand for a resolution, it continued to work with La Senza in good faith.

By the end of November, La Senza owed MGF a staggering amount of $41.7 million and showed no signs of addressing the payment breaches. It is currently unclear whether L Brands, the former parent company of La Senza, holds any responsibility for a portion of this sum. MGF claims that L Brands committed to guaranteeing $20 million of La Senza’s orders placed between June 2019 and May 2020, even after the brand was sold.

MGF also alleges that La Senza is withholding crucial financial information, which is hindering the supplier’s ability to make informed decisions about how to handle the brand’s current situation. On Monday, MGF filed another bankruptcy petition against La Senza Canada in Toronto. The dates for hearings have yet to be determined for both Delaware and Toronto.

Links:
Victoria’s Secret Official Website
Regent LP Official Website