Sequential Brands Group has settled with the Securities and Exchange Commission (SEC) over charges it violated accounting principles in securities law when it did not acknowledge goodwill impairment that eventually landed on its balance sheet as a $304 million write-down.

The New York City-based company, whose brands included Jessica Simpson’s clothing line and yoga fitness label Gaiam, avoided being fined by the SEC because it filed for bankruptcy in September.

The SEC said Sequential Brands willfully ignored “objective evidence of impairment” to its goodwill in 2016 and did not correct the issue for three consecutive quarters in 2017. Without admitting or denying the agency’s claims, the company pledged not to further violate securities laws.

Sequential Brands entered into a settlement Nov. 23 with the SEC in U.S. District Court for the Southern District of New York. The agreement was filed Monday. As part of the settlement, the SEC retained the right to reinstate “the maximum civil penalty allowable under the law” against Sequential Brands for the alleged violations if it is found the company misrepresented its assets, income, liabilities, or net worth in its bankruptcy case.

The company is currently negotiating with creditors and the bankruptcy court to sell off some of its brands to pare down its debt. In part because of the company’s financial troubles, Nasdaq delisted Sequential Brands’ stock from its exchange in September.

The SEC filed its civil complaint against Sequential Brands in December 2020, alleging the company misled investors when it ignored internal calculations and other negative developments, including declining stock price, to claim in 2016 its goodwill would not be impaired.

“By avoiding an impairment to its goodwill in 2016, Sequential’s financial statements and SEC filings materially understated its operating expenses and net loss and materially overstated its income from operations, goodwill, and total assets,” the SEC said in its original complaint. “This created a false impression of its financial health and ability to execute on its business plan. Sequential carried forward its material errors, resulting in material misstatements and omissions in Sequential’s financial statements and SEC filings for the first three quarters of 2017.”

Counsel for Sequential Brands noted the company could not offer comment until the agreement is signed off by the court.