The Lycra Company has filed for Chapter 11 bankruptcy protection (controlled administration) at the Houston court in Texas, with the aim of reducing a debt of $1.2 billion. In the filed documents, the company attributes the resort to the procedure to a “convergence” of factors, including the consequences of the pandemic, tariffs, increased competition, and ongoing legal disputes.
According to the documents, creditors have agreed to a new financing of $75 million and the cancellation of most of the existing $1.53 billion debt. The company specified that customers, suppliers, and approximately 2,000 employees will not experience operational impacts.
Lycra also emphasized that the prepackaged plan is the result of months of negotiations with major financial creditors and reflects a shared agreement. With almost unanimous support from stakeholders, the company expects to complete the restructuring quickly and emerge from the procedure within 45 days.
Causes of the Crisis
The Chapter 11 filing comes after years of financial instability for the Delaware-based group, starting from the acquisition in 2019 by the Chinese textile conglomerate Shandong Ruyi Textile and Fashion International Group. This was highlighted by cfo Dean Williams in a statement supporting the initial requests. Previously, Lycra was controlled by Koch Industries.
Among the main critical points, Williams mentions a combination of macro and sectoral factors: weak and prolonged demand in the spandex and apparel markets, triggered by issues related to Covid-19 — including closures, supply chain disruptions, and decreased consumption — and a slower-than-expected recovery in Western markets.
In recent years, textile manufacturers’ demand has remained subdued, due to widespread destocking activities along the supply chain and a context characterized by high-interest rates and inflation. This is compounded by the expansion of competitors’ production capacity, which has altered competitive balances and reduced Lycra’s plant utilization rates from around 80% in mid-2024 to about 60% by the end of 2025, forcing the company to reduce production.
Additionally, the company has faced increasing competitive pressure from low-cost producers, particularly in Asia, resulting in price erosion and market share declines. Prices of “generic” spandex have dropped to levels close to production costs, squeezing margins across the sector. In the personal care segment, even the diaper market has shown signs of weakness and fragmentation, with a growth in private labels and further price pressures.
These factors are compounded by macroeconomic uncertainties related to tariffs, trade policies, and inflation, which have led brands to adopt more cautious strategies in orders and inventory management. The repercussions have spread throughout the value chain, with particularly significant impacts in South Asia and Central America. Rising raw material and energy costs have further impacted profitability.
Financially, Lycra has incurred significant costs related to managing its capital structure, including refinancing and restructuring operations. In 2022, Shandong Ruyi’s creditors took full control of the company after defaulting on a $400 million loan.
Overall, these factors have led to a decline in EBITDA, dropping from $132 million in 2024 to an estimated $44 million for 2026.
Additional elements contributing to the situation include legal risks in China, the failure of a sale attempt in 2025, and the early closure of the partnership with Qore — a joint venture between Cargill and HELM AG for sustainable spandex production — which incurred a $4.75 million expense.
Next Steps in the Restructuring
Lycra has requested the court’s usual initial authorizations (“first day motions”) to continue operating regularly during the restructuring process, including full coverage of debts to suppliers and business partners within ordinary operations.
The restructuring support agreement (RSA) has received broad consensus from holders of major debt lines, who have committed to vote in favor of the plan.
“Today represents a key step: we are taking decisive measures to reduce debt and strengthen our financial base”, stated ceo Gary Smith, emphasizing the commitment to ensure operational continuity and support to customers and partners.
In 2025, Lycra’s revenue reached $724 million. Today it has eight production sites, three research centers, and 11 offices across North America, Europe, Asia, and South America, with a total of approximately 2,000 employees.
