Urban Clothing Lines Face Bankruptcy; Uncertain Future

A slew of well known Hip-Hop clothing brands are in danger due to large debts and an ailing economy. Kellwood, the parent company of Baby Phat, Phat Farm and XOXO brands could be forced into Chapter 11 due to a $140 million bond issue that is due to mature Wednesday (July 15).

While Kellwood attempted to defer the bond payment while restructuring the debt, but the biggest bond holder - Deutsche Bank - is refusing to entertain the offer.

According to The Wall Street Journal, Kellwood has over $500 million in debt and $800 million in annual sales.

Russell Simmons launched Phat Farm clothing in 1992, while his wife, model/designer Kimora Lee Simmons, started Baby Phat in 1999.

Simmons sold Phat Farm and Baby Phat to Kellwood in 2004 for $142 million dollars in cash.

Mark Ecko’s Ecko Enterprises is also selling spin-off business in order to cut costs within the company, which at it’s height, raked in $1.5 billion annually.

Ecko’s 275,000 square-foot, West 23rd Street headquarters, which cost $9 million dollars per-year, has been put on the market as the company attempts to raise cash.

Like Kellwood, Ecko is attempting to raise enough cash to pay off Ecko Enterprises’ $170 million debt to creditor CIT Group, as well as manufacturer Li & Fung USA.

In addition to the Ecko Clothing line, Ecko Enterprises publishes Complex Magazine and a video game unit, which published owns Mark Ecko Entertainment, a company that produces video games like the graffiti game Getting Up Contents Under Pressure.