Nasty Gal Files For Bankruptcy, #GIRLBOSS Founder Cuts Ties

Online retailer Nasty Gal, which was founded 10 years ago by entrepreneur and author Sophia Amoruso, is expected to file for Chapter 11 bankruptcy protection.

Although it’s been a tough two years for the onetime eCommerce darling, the bankruptcy news may still come as a surprise to many Nasty Women.

According to a press statement issued by the L.A.-based company, the move is being done as a way to “address our immediate liquidity issues, restructure our balance sheet and correct structural issues including reducing our high occupancy costs and restoring compliance with our debt covenants.”

“We expect to maintain our high level of customer service and emerge stronger and even better able to deliver the product and experience that our customers expect and that we take pride in bringing to market,” the statement continued.

While the firm has raised an estimated $65 million over the years, TechCrunch confirmed, it has struggled with accusations that it cheated employees of benefits, such as maternity leave, and lackluster responses to the clothes it is sending to market.

This year has also seen “strategic restructuring” that has equated to 10 percent staff cuts as it tried to keep up with fast-fashion players with lots of scale and the ability to react to changing trends in fashion in real time — usually at a low cost for shoppers.

Noting that Nasty Gal — which has two physical locations (both in the Los Angeles area, where the company is based) in addition to its online presence — had previously made staff cuts in 2014, the recent layoffs look to be reflective of the difficulty that online brands can endure as they attempt the necessary expansion from hot startups to more traditional retail operations.

The retailer was reportedly on the hunt for a buyer just months ago, with sources close to the matter sharing that Revolve was the leading contender to snap up Nasty Gal, though neither firm made any official comments at this time.

As Nasty Gal moves forward with its bankruptcy filing, the company’s founder and chairwoman Sophia Amoruso will also resign as executive chairwoman, Recode reported.