Nasty Gal founder Sophia Amoruso, who was L.A.'s (and possibly the country's) most darling and championed self-made #girlboss just a few years ago, has fallen on some tough times. According to a source who spoke to Recode, the online clothing empire is preparing to file for Chapter 11 bankruptcy protection, allowing it to reorganize its business. The source says that Nasty Gal will tell its employees today before filing publicly.
While not all bankruptcies are a sure failing sign, there's more to the story that doesn't bode well. Amoruso is resigning as executive chairwoman, according to Recode sources, as is director Danny Rimer, who is expected to step down from the board. Apparently, Nasty Gal—which has two brick and mortar locations in Los Angeles (one in Santa Monica and another on Melrose Avenue) as well as global e-commerce business—has experienced a tumultuous CEO change; layoffs in both 2015 and 2016; and multiple lawsuits by former employees. According to sources, Nasty Gal even explored selling the company. Though high-profile investors like Index Ventures and well-known retail executive Ron Johnson have put more than $50 million into the company over the last five years, it seems to have been "too little too late" for a long-struggling company.
There's no word yet as to when Nasty Gal will file publicly, or what the company's next steps will be—from shuttering its Los Angeles retail locations to laying off employees.
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