Past Challenges. A New Chapter.

An open account of the circumstances that impacted District 5, our customers and our business—and the changes we have made moving forward.

District 5 has always tried to be as transparent as possible about the challenges our company has faced over the past several years. Those challenges affected not only our business, but our customers, our designers and our family.

District 5 is, and always has been, a family business. I founded the company in 2009 and built it alongside my two children. At the time, we were among the first online destinations of our kind, connecting customers around the world with extraordinary designer fashion.

For more than a decade, we grew that business, developed relationships with designers and served thousands of customers.

By 2023, District 5 had reached an all-time high.

Then everything changed.

What Happened

In 2023, District 5 entered into a relationship with a payment processor, Priority Payments. What followed became the most damaging period in our company's history.

Over approximately nine months, we experienced repeated and severe issues involving access to funds processed through our merchant account.

There were instances in which customer payments were processed but the corresponding funds were not made available to us as expected. Funds could be deposited and subsequently withdrawn. We experienced account freezes, unexpected debits, significant reserves and extensive difficulties obtaining clear accounting of the funds associated with our account.

In one particularly alarming instance, 32 chargebacks were processed in a single day while we were told the processor was attempting to identify the source of an issue.

For a retail business, access to payment-processing proceeds is its lifeblood. When a customer purchases a designer gown, those funds allow us to pay the designer, secure the merchandise and fulfill the customer's order.

When those funds became inaccessible, the consequences moved rapidly through the entire chain.

We could not pay certain designers when expected. Designers, in turn, would not release merchandise. Customers did not receive dresses when promised. Refunds became increasingly difficult to issue.

Customers were understandably angry. Designers were angry.

And District 5 was caught in the middle of a financial crisis that was growing faster than we could resolve it.

By 2024, we determined that we could no longer continue under the existing processing relationship. We disconnected from the processor and attempted to rebuild using another provider.

We believed that would finally allow us to return to normal.

Unfortunately, it did not.

The Aftermath

Following the termination of that processing relationship, District 5 encountered substantial difficulty obtaining conventional merchant processing.

The processing terms subsequently available to us included substantial reserves and restrictions that created additional pressure on our cash flow.

Despite everything that had happened, we continued trying to operate, fulfill obligations and repair relationships with customers and designers.

Eventually, District 5 sought protection under Chapter 11 of the United States Bankruptcy Code, which is designed to allow a business to reorganize while continuing operations.

We kept going.

District 5 was my life's work. It was a business my children and I had spent years building together, and we were not prepared to simply walk away from it.

Ultimately, however, the cumulative financial damage, loss of designer relationships, negative customer experiences and continued payment-processing difficulties became too great. The bankruptcy proceedings ultimately moved into Chapter 7.

That chapter closed the original District 5 company.

But it did not close the District 5 story.

Our Customers

One thing remained extremely important to us throughout this process: the people who had trusted District 5.

There were customers who had paid for merchandise and had not received what they expected. Regardless of what was happening behind the scenes, we understood that from the customer's perspective, they had trusted us.

We have never forgotten that.

Where we were able to resolve outstanding customer matters, we worked to do so. We have also sought ways to recognize customers who were affected during this period, including through store credit where appropriate.

We never wanted a customer to lose because of what happened to our company.

Many of the negative reviews that remain online today originated during this period. We understand why those customers were frustrated. They experienced the consequences of circumstances they could neither see nor control.

Neither could they have known what was happening behind the scenes.

That is one of the reasons we are publishing this account today.

Rebuilding District 5

Through the bankruptcy process, I was ultimately able to reacquire the District 5 name and social-media assets.

We then began rebuilding.

Not simply reopening—rebuilding differently.

District 5 was reorganized under a new corporate structure. We changed the way we approach financial relationships, payment processing, business partners and risk. We learned difficult lessons about protecting a company that took more than a decade to build.

As of June 2026, District 5 has established payment processing through JPMorgan Chase, marking an important milestone in our return to normal operations.

We are in a fundamentally different position today.

Documentation and Accountability

The events described here are not based simply upon our recollection of what occurred.

We have retained extensive documentation concerning the payment-processing issues experienced by District 5, including transaction records, correspondence and other supporting materials.

We have also reported aspects of the matter to appropriate law-enforcement and governmental authorities and have sought legal counsel regarding our available remedies.

Because some of these matters may involve ongoing or potential legal proceedings, there are details we will not discuss publicly at this time.

However, we stand behind the factual account presented here.

A New Chapter

We cannot change what happened.

We can acknowledge it, learn from it and make sure the District 5 that emerges from that period is stronger than the company that entered it.

We also understand that someone discovering District 5 today may search our name and encounter negative reviews from this period. We do not ask anyone to disregard those reviews.

Instead, we ask that you understand the circumstances surrounding them—and judge us by how we conduct our business today.

For 17 years, customers have trusted District 5 to be part of some of the most important moments of their lives. We don't take that trust lightly.

To those who stood beside us during an extraordinarily difficult period: thank you.

To customers who were affected: we hear you, and we have not forgotten you.

And to those discovering District 5 for the first time: we would be honored to earn your business.

We survived a chapter that nearly ended our company.

Now, we are writing the next one.

Thank you, sincerely,

Theresa DeMarco
Founder, District 5

 

17 Years of District 5

Our story is much bigger than one difficult chapter.

For 17 years, District 5 has been shaped by the designers we've worked with, the customers we've dressed, the moments we've celebrated, and the relationships we've built along the way.

Explore our 17th Anniversary Edition, celebrating the people, fashion and memories that made District 5 what it is today.

EXPLORE OUR 17TH ANNIVERSARY EDITION