Warnaco Group, the embattled maker of Calvin Klein jeans, Speedo swimwear and other apparel has filed for bankruptcy protection, saying it was unable to service its $3.1 billion in debt amid sluggish retail sales and increased competition.
The Chapter 11 filing marks a setback for chief executive Ms Linda Wachner, who built Warnaco into a major force in fashion by manufacturing designer-label clothing for the masses.
Mr Wachner, an erstwhile darling of Wall Street who Fortunemagazine two years ago called one of corporate America's "most powerful women," encountered troubles in the late 1990s, including legal disputes with Calvin Klein and Fruit of the Loom over licensing.
Auditors warned in April they doubted Warnaco could continue operations, and shareholders filed a lawsuit, alleging the company concealed its true value. Ms Wachner, the company's largest shareholder, owns more than 22 per cent of Warnaco.
Shares of Warnaco did not trade following the filing. The stock had fallen to 39 cents on the New York Stock Exchange from $8.60 a year earlier.