The Lycra Company has entered into a restructuring support agreement (RSA) with what it calls “the overwhelming majority” of its creditors so as to cut about $1.2 billion in long-term debt and establish a structure to recapitalize the company “for long-term financial stability and growth.” The plan follows several months of negotiations with creditors and, says Lycra, has “near unanimous support” from “stakeholders.”
Accordingly, the company and some of its affiliates have filed a voluntary prepackaged Chapter 11 case in US Bankruptcy Court for the Southern District of Texas. This excludes certain entities with the company.
Lycra expects to emerge from Chapter 11 in 45 days as of March 17, but it is seeking in the meantime “first day” relief to ensure ordinary business operations and approval to continue paying in full all valid debts to vendors and suppliers. To this end it has obtained commitments for $75 million in debtor-in-possession financing and more than $75 million in exit financing.
Lycra manufactures fibers under the Lycra, HyFit, T400, Coolmax, Thermolite, Elaspan, Supplex and Tactel brands, which it describes in its court-filed Disclosure Statement as “integral to virtually every apparel category – from activewear to everyday denim and medical compression garments.”
Lycra has changed hands twice in recent years. In 2019 it was acquired from Koch Industries by the Chinese textile conglomerate Shandong Ruyi Textile and Fashion International Group (Ruyi). Ruyi subsequently defaulted on its own debt, and in 2022 its creditors took full control of Lycra’s equity through an enforcement action on pledged shares. It is under this post-enforcement ownership, and the debt accumulated since the Ruyi acquisition, that the company has now filed for Chapter 11.
Other causes
According to the aforementioned Disclosure Statement, Lycra’s woes stem from the following:
- A collapse in demand due to Covid lockdowns, with their market closures and supply-chain disruptions. Lycra’s post-pandemic rebound in key Western markets was slow to come.
- Persistent destocking. Mills continued to cut inventory for years after the lockdowns, suppressing demand amid high interest rates and inflation.
- Competitor overcapacity. With rivals expanding production, Lycra was obliged to cut its own manufacturing from about 80 percent of capacity in mid-2024 to about 60 percent by end-2025.
- Asian price competition. Low-cost Asian manufacturers eroded Lycra’s market share. Generic spandex prices fell to near cash-cost levels, compressing margins throughout the industry.
- Fragmentation of the market for personal care. The baby diaper segment softened and fragmented, with private-label products and low-cost Asian competitors cutting into Lycra’s volumes and pricing.
- Tariffs and trade policy. Tariff volatility made brands reluctant to place orders and conservative on inventory and had knock-on effects in South Asia and Central America.
- Rising costs in raw materials and energy. Fluctuating commodity prices, especially for energy and spandex production inputs, raised operational costs and further compressed margins.
- HELM/Qore take-or-pay liability. A 2023 long-term supply agreement for bio-derived spandex input Qira carried take-or-pay obligations that became unsustainable with production delays and a fall in demand to less than contracted volumes. HELM alleged rejection damages of more than $100 million. The case was settled this month for $4.75 million.
- Litigation in China. Four current cases date back to a disputed 2021 agreement under which Lycra’s Chinese subsidiary, Chuanglai Fiber (Foshan), could be compelled to transfer 574 million Chinese yuan renminbi (€72.0m) in physical assets to a joint venture affiliated with Jining Ruyi Wanzhong Venture Capital Investment Management Partnership, an affiliate of Ruyi. Liquidated damages have accrued at 0.03% per day since February 2022. A ruling in February 2026 overturned an earlier arbitration award in Lycra’s favor, leaving the exposure live.
- Failed sale. A 2025 agreement to sell Lycra to a Chinese state-owned enterprise collapsed by August 2025, for lack of regulatory approval or acquisition financing.
- EBITDA collapse. All of the above drove EBITDA from approximately $132 million in 2024 to a projected $44 million for 2026.
- Debt-maturity crisis. Lycra has about $1.53 billion in debt approaching maturity in December 2025 but has secured extensions to no later than March 2026.
