The company announced a settlement involving its exit from IM Topco, the owner of the Isaac Mizrahi brand, as part of a deal with WHP Global affiliates IMWHP and IMWHP2.
Shares of Xcel Brands surged nearly 70% in after-hours trading on Friday after the company disclosed a major settlement agreement resolving disputes related to its stake in the Isaac Mizrahi brand.
A filing with the SEC on Thursday showed that Xcel Brands entered into a settlement agreement with IM Topco, IMWHP, and IMWHP2 — affiliates of brand management firm WHP Global that control the Isaac Mizrahi brand.
Under the agreement, Xcel will transfer its 17.5% equity interest in IM Topco to IMWHP2 on Oct. 1, effectively exiting its ownership position.
As part of the settlement, Xcel received a capital appreciation right entitling it to 15% of the net consideration received by IM Topco, IMWHP, IMWHP2, and other equity holders in excess of $46 million from any qualifying capital transaction involving IM Topco through Sept. 1, 2032. The filing clarified that this right would be payable within 10 business days of any such transaction’s closing.
The agreement also releases Xcel-CT MFG, a unit of Xcel Brands, from any future liability under certain provisions of a prior License Termination Agreement between IM Topco and Xcel-CT.
As part of the settlement terms, Xcel executives Joe Falco and Ken Downing will continue providing services to IM Topco through Dec. 31, with compensation of $33,333 per month. IM Topco may choose to retain Falco’s services on a month-to-month basis through 2026 at a rate of $12,500 per month.
The filing further noted that Xcel Brands, Xcel-CT, and IM Brands will continue to provide support to IM Topco’s team through workspace access and operational assistance until the end of 2025.
On Stocktwits, retail sentiment for Xcel Brands was ‘extremely bullish’ amid ‘extremely high’ message volume.
One retail trader noted that short sellers appeared to be under mounting pressure, citing a rise in short interest to 14.3% of the float and suggesting that a sharp squeeze could be imminent if momentum persists.
Another user predicted the stock could climb further to $10 on Friday.
Xcel Brands stock has declined 66% so far in 2025.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<