Leica Bankruptcy: The Fall of the Elastic Fiber Empire in the Capital Game

The legendary company—Lycra Corporation—once an absolute ruler in the global elastic fiber industry and a storied enterprise that rode along with Armstrong to the Moon—has officially filed for bankruptcy protection with the U.S. Bankruptcy Court for the Southern District of Texas.

The fabric giant, which has a 68-year history and once invented elastic fibers—creating a fabric that made jeans and yoga pants fit snugly—and which also rode to the Moon alongside U.S. astronaut Armstrong, ultimately still reached this point of bankruptcy reorganization after four years of financial turmoil and two rounds of creditor takeovers.

From the glory of the Moon-landing spacesuits to the document number in the Texas bankruptcy court, Lycra used 68 years to run its rise-and-fall course; whether it can be reborn in the future remains unknown.

It once sparked a fabric revolution

Lycra’s iconic red hang tag was once a byword for “perfect fit and comfort.” In the end, it fell amid the ruins of capital mergers and acquisitions. Its downfall can be described as a complete cycle history of a business empire, and also a profound pain point that traditional manufacturing suffered under globalization competition and highly leveraged capital operations.

Lycra’s legend began in 1958, when the chemical giant DuPont developed it successfully. This fiber, which could be stretched to 5 to 8 times its original length and had an almost perfect elasticity recovery rate, quickly replaced natural rubber. It not only created brand-new categories of clothing such as pantyhose, tight-fitting pants, and athletic wear, but also shone brightly at the 1968 Winter Olympics and in the 1969 Apollo moon-landing mission.

The arrival of Lycra sparked a revolution in fabrics. It could be stretched to 5 to 8 times its original length without breaking, with an elasticity recovery rate close to perfect and a lightweight yet durable performance. It quickly replaced natural rubber in the lingerie market, and also gave rise to new categories such as pantyhose, tight-fitting pants, and athletic wear.

At the 1968 Winter Olympics, the French ski team wore Lycra-blend tight-fitting ski suits and won handsomely on the medal table. This type of garment significantly reduced wind resistance, provided support for muscles, and reduced energy loss caused by vibrations. Soon after, events such as swimming and cycling were also gradually taken over by Lycra.

When U.S. astronaut Armstrong stepped onto the Moon’s surface in 1969, the spacesuit he wore also included a layer of Lycra fiber. It was used to secure cooling water pipes to ensure heat-exchange efficiency and to prevent the astronaut from overheating in extreme outer-space conditions.

DuPont pioneered a unique “ingredient branding” strategy. Lycra was not only sold as a chemical product, but also established partnerships with downstream apparel brands through its red wave hang tags. Consumers’ awareness of Lycra’s hang tags even exceeded their awareness of the apparel brands themselves—once a piece of clothing had a Lycra hang tag, it could command a significant brand premium.

In the 1990s, Lycra entered its most glorious period. From aerobics and high-cut bodysuits to neon-colored tight pants, Lycra established a fashion aesthetic of “athletic, long, and tight silhouettes,” becoming a global fashion-culture icon. Although its original patents had long expired, Lycra still held more than 50% of the global spandex market.

By establishing “hang-tag partnerships” with downstream brands, Lycra successfully achieved “ingredient branding,” enabling consumers to pay a high premium for garments bearing red hang tags. Every year, as many as 1.3 billion textile items worldwide were certified in this way.

Falling into capital difficulties

However, after DuPont’s transformation, this highly profitable segment changed hands several times, and the turning point in its fate came in 2019.

In 2019, the Chinese textile giant Yiwang Group acquired Lycra for a high price of $2.6 billion from the American company Kauts Industries, aiming to build a “China-version LVMH” fashion empire spanning everything from raw materials and fiber R&D to retail of end luxury goods. At that time, Yiwang Group had, through a series of cross-border acquisitions, already encompassed many well-known international brands such as SMCP and Bally, but its funding relied heavily on external loans, with total debt reaching $4.4 billion.

Just three months after the acquisition, Yiwang Group fell into a material default when its capital chain broke, and a seven-year “capital nightmare” began. In June 2022, a Dutch commercial court ruled that creditors would take over Lycra’s equity. The new owners became a consortium made up of the Korean private equity group Lindeman Partners, Hong Kong’s Tor Investment Management, and China Everbright.

Although creditors claimed that Lycra had moved beyond Yiwang Group’s financial troubles, the situation actually continued to deteriorate. The bankruptcy filing documents reveal harsh figures: Lycra’s capacity utilization rate plunged from around 80% in mid-2024 to 60% by the end of 2025; and its earnings before interest, taxes, depreciation, and amortization (EBITDA) was expected to drop from $132 million in 2024 to $44 million in 2026.

The reasons behind this situation are complex. First, there were historical legacy asset disputes. Before Yiwang Group lost control, it was accused of transferring Lycra’s high-quality assets in China. Ongoing litigation between the two sides stemmed from a dispute over contributions totaling RMB 574 million for a joint venture in Foshan. This severely damaged its reputation in China, a core market for the company, and in fiscal year 2025, 29% of Lycra’s revenue came from the China market.

More fatally, the market environment changed dramatically. Rising energy and petrochemical raw-material costs squeezed gross margins significantly, while competitors in Asian countries such as China expanded capacity on a large scale, causing spandex prices to keep falling. The price of generic spandex had even reached “near cash cost levels.”

Meanwhile, supply-chain disruptions caused by the pandemic, high inflation, and an underwhelming recovery in the Western markets further compounded Lycra’s problems. In early 2025, creditors tried to sell the company to another Chinese firm to repay debts, but the deal fell through in August. By early 2026, of Lycra’s more than $1.5 billion in debt, the vast majority would be due in a concentrated manner at the end of March, forcing creditors to launch a “Plan B”—to implement debt-to-equity conversion through the bankruptcy court.

Under the “pre-packaged” bankruptcy reorganization plan submitted this time, creditors totaling more than $1.2 billion agreed to convert their claims into equity or warrants. After the reorganization, Lycra would be held by international financial consortia such as Lindeman Asia and Nexus Capital Management. Total debt is expected to drop from $153 million to roughly $33 million, and the leverage ratio would return to a healthy range.

The company pledged that the reorganization would not affect production operations, customer deliveries, or employee compensation. The annual interest savings would be reinvested into R&D and capacity upgrades. However, eliminating debt cannot automatically restore lost market share, nor can it erase the scale advantage built by new rising players in Asia.

From the glory of moon-landing spacesuits to the document number in the Texas bankruptcy court, Lycra used 68 years to complete its rise-and-fall. The once red wave logo that represented fashion and technology now hangs on the legal documents of bankruptcy reorganization. Whether it can be reborn in the future remains unknown.

(Economic Observer Online Li Qiang / Text)

For massive information and precise interpretation, it’s all in the Sina Finance APP