What's Really Going On With Jessica Simpson's Company Going Bankrupt?

Even though Jessica Simpson's clothing, shoes, and home goods brand was a staple of her business empire for nearly 16 years, the singer-turned-fashion mogul lost majority ownership in 2015 — and now, it seems any chance of getting it back is in peril of being shut down permanently. According to a report published by The New York Post, the brand, which was bought by a licensing company called Sequential Brands Group earlier this year, is in danger of being sold to yet another owner after Sequential filed for Chapter 11 bankruptcy at the end of August. As the Post noted, Simpson made an emergency effort to regain control of the enterprise on August 30, the day before the filing was made, by offering to buy it back for $65 million. But now, it looks like the company has a different setup in mind.

Simpson and her mother Tina (who, along with Simpson's sister Ashlee, also helped launch the brand in the mid-aughts) told the Post that they "are indeed in discussions to buy back 62.5% of the Jessica Simpson Lifestyle Brand (of which they own the remaining portion)," noting that it "has been consistently profitable" over the years. But there are a few key points missing. One: why, if that's the case, did they have to relinquish it in the first place? And two: how is this potential deal actually going to go down? Read on after the jump to find out. 

Jessica Simpson's bid to get back her brand isn't foolproof

Jessica Simpson's 16-year-old brand was a regular money-maker and an "expanding entity over the last 16 years ... with 33 product categories [and] a social reach of 15 billion fans," per statement to The New York Post, it seems the business empire's undoing was directly connected to the coronavirus pandemic. 

According to Bloomberg's report on the matter, the company lost a significant amount of money during a corporate restructure during the height of COVID-19, due to "falling revenue from licensing deals and the pandemic." The brand then acquired a whopping debt of $435 million, compared to the $443 million of the company's total assets. Now, it looks like Sequential plans to sell the company to the highest bidder, and Simpson and her mother will attempt to bid back the brand at auction. 

While Simpson's plan to bid on her own business in order to ultimately retain it could feasibly work (it seems likely that she'll also get the first bid), it isn't a guarantee. Speaking with Kenneth Rosen, an attorney who specializes in bankruptcy, told the tabloid that it could be "possible that Jessica Simpson is outbid" by a competitor. Let's hope she isn't!