Thursday, June 10, 2021
Alex and Ani, the company that revolutionized bangle jewelry in America more than a decade ago could not escape the financial impacts of the pandemic.
The Rhode Island jewelry company joins some of the biggest names in fashion and retail who have filed for bankruptcy protection while they restructured.
The list includes Brooks Brothers, Ann Taylor, Lord & Taylor, Men’s Wearhouse and Jos. A. Bank, Roberto Cavalli, Diesel and so many more.
In its announcement, Alex and Ani said that in continuation of its efforts to stabilize its business, it has entered into a Restructuring Support Agreement (“RSA”) with its debt holders and equity sponsors, Lion Capital and Carolyn Rafaelian, regarding a comprehensive financial and operational restructuring. To implement the restructuring, the Company has commenced Chapter 11 proceedings in the United States Bankruptcy Court for the District of Delaware.
Rafaelian left the operation of the company about a year ago and has since launched a new jewelry company.
Alex and Ani intend to continue operating its currently open stores and its website as usual during the court-supervised process.
The company has been one of Rhode Island’s great successes. It created a national fashion trend and catapulted from a small jewelry manufacturer to upwards of $400 million in sales over about a five-year period. But, in fashion what goes up, must come down.
In Rhode Island — Company Expects to Sustain Operations
The company tells GoLocal that the headquarters, as well as distribution and manufacturing, will remain in East Greenwich.
“We understand the important role we play in the local economy. We have been in business here for almost 20 years, and within that time we have helped establish a large network of talented and dedicated suppliers and craftsmen. I would emphasize that we expect there to be little to no disruption in operations here in our home state. As we navigate the restructuring process, our employees throughout the headquarters office and distribution center will continue without interruption. By utilizing the Chapter 11 process, are establishing a clear path forward, and solidifying a healthy and robust future,” said Kate Robinson EVP, Brand Strategy for Alex and Ani.
According to the announcement, contemporaneously with the Chapter 11 filing, Alex and Ani commenced a marketing process, seeking buyers who will have the opportunity to submit competing bids for the purchase of the assets.
At the same time, stockholders have agreed to the terms of a comprehensive standalone restructuring that will serve to ensure go-forward operations remain intact.
“We have worked diligently to overcome challenges with our capital structure, and we are very pleased with our progress from an operational efficiency standpoint,” said Alex and Ani’s Chief Restructuring Officer, Robert Trabucco.
“In 2020, COVID-19 forced the company to pause its key strategic growth initiatives, temporarily close stores and scale back its operations in light of reduced in-store customer demand. During that time, Alex and Ani continued to invest in its eCommerce platform,” said Trabucco.
Alex and Ani has taken significant steps toward financial health through realignment of sales channels, reducing retail footprint, and reductions in capital expenditures and working capital. During the restructuring process, the company will continue to have the financial resources to purchase the goods and services necessary to fulfill customer’s needs while continuing to offer the high-quality service and support that has become a hallmark of the brand.
“After a thorough review of a number of available options, the Board determined that a Chapter 11 filing is in the best interests of all parties, including our valued customers and employees,” he said.
Trabucco also emphasized that there will be little to no disruption in day-to-day business and operations as a result of the Chapter 11 filing. “Our employees will continue to be paid as usual during this process. The Company will look to optimize its retail footprint, bolster the eCommerce platform, and focus on strategic wholesale accounts,” he said.
“This process and proposed transaction is positive news for our employees, our customers, and our suppliers. Alex and Ani will have enhanced access to the financial resources with an optimized capital structure necessary to continue to prosper and grow. By utilizing the Chapter 11 process, we are able to ensure an expedited and orderly right-sizing of our balance sheet and operations,” Trabucco added.
Kirkland & Ellis LLP and Klehr Harrison Harvey Brazenburg LLP are serving as the Company’s legal co-counsel and Portage Point Partners, LLC is serving as its investment banker and financial advisory.