“She’s built a huge brand based on youthfulness and rebellion,” said Sophia Amoruso, 28, who designs the vintage- and punk-inflected Nasty Gal line. “Her clothes were never too-cool-for-you. They just said that it’s fun to be a girl.”

THE road to bankruptcy was paved with candy colors. At her label’s height in the mid-2000s, Ms. Johnson had $150 million in annual sales, 400 employees and lucrative licensing deals in footwear, handbags, sunglasses and fragrances. In 2007, looking to take her brand bigger, Ms. Johnson sold a majority stake in her company to Castanea Partners, a private equity firm in Boston. A dozen stores soon opened in San Francisco; Chicago; Austin, Tex.; and elsewhere.

But the expansion collided with declining store sales, and the company found itself defaulting on a $48 million loan. In 2010, Steve Madden stepped in to take over the loan and, with it, ownership of the Betsey Johnson brand. So why the tumble? Ms. Johnson, not one to focus easily, had a hard time answering. “We were bogged down in five-year projections,” she said, haltingly. “Or maybe it all began when stores started knocking off my $250 prom dresses for $49.”

Whatever the case, profits plunged by half and last April, unable to find a buyer after approaching 22 investors, Betsey Johnson filed for bankruptcy, with more than $4 million in debt.

Industry observers blamed the poor timing: the expansion coincided with the 2008 financial crisis. “They went into a licensing frenzy,” said Fern Mallis, a fashion consultant. “There was not a category she didn’t have her name on, and there was maybe not the infrastructure to manage that carefully.”

Steve Madden, the shoe and fashion mogul who is now effectively Ms. Johnson’s boss, put it more bluntly. “They had delusions of building a huge company and going public,” he said. “So they borrowed a lot of money, they had too many stores, and their rents were too high.”