Yesterday, WWD announced that Betsey Johnson LLC had filed Chapter 11 and intended to lay off at least 350 employees as a residual effect. What was not made public is that her entire design team had already received their pink slips yesterday afternoon with CEO, Jon Friedman, formally resigning at a company-wide meeting inside the brand’s showroom, sending the team off “Irish wake style” with a flurry of cupcakes and champagne, reports a (now unemployed) member of Johnson’s runway design team, who wished to remain anonymous.
“As of two weeks ago we weren’t allowed to spend any money—we couldn’t buy trims, fabric, send out samples to be made domestically or abroad. Factories weren’t sending us what we had ordered because they were worried about not being paid,” the source explained. The layoffs actually started six weeks ago, when approximately fifteen freelancers and full-time employees were let go. “Betsey was there and though everyone was trying to remain positive as investors were still coming through, she said. ‘I’m going to be really upset when people who recognize me on the street start asking—Bestsey, what happened, what went wrong?’”
According to the source, at least three rounds of potential investors had come through the offices in the past two months, leaving employees with an added sense of job security. ”We kept being told that things would turn around, and the discussions with the investors seemed to last a long time—they were really receptive to the ready-to-wear sector of the brand, but when it got down to licenses, everything seemed to fall apart. They weren’t agreeing with Steve Madden’s vision for the brand, which was to take it down-market at a lower price point than what’s sold in Macy’s now.”
In an internal memo sent to employees, CEO, Jon Friedman writes “The company is now left with no choice but to immediately file for bankruptcy protection and begin an orderly disposition of its assets….[and] intends to conduct going out of business sales at its store locations.” Our source added that the brand had already brought in shipping employees from its New Jersey warehouse to begin organizing a liquidation, and that during the meeting Friedman exclaimed, “Make no mistake, I want to make sure this is very clear—it’s over.”
Johnson’s assorted licenses will live on, however, “I would not expect to see any more runway shows after this,” our source said, contrary to WWD’s report that Johnson intends to go ahead with a presentation this September