PROVIDENCE – Alex & Ani filed for Chapter 11 bankruptcy Thursday morning, according to documents from the U.S. Bankruptcy Court for the District of Delaware.
Chapter 11 bankruptcy typically involves the reorganization of a business, including debt and assets.
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The company reported between $100 million and $500 million in assets and an equal range of liabilities.
Alex & Ani has recently suffered from adverse trends driving customers away from brick-and-mortar retail, like many other retailers. Moreover, Alex & Ani’s explosive growth in the early 2010s created operational challenges as the company’s existing infrastructure struggled to keep up with demand for its products, and significant turnover in management disrupted key business relationships.
In its court filing, the company noted that shortly after a restructuring in 2019 it was hit by the impact of the COVID-19 pandemic, experiencing a massive drop in revenue. Alex & Ani Chief Restructuring Officer Robert Trabucco said that the company took steps to furlough employees and to minimize operating expenses, but the decline in revenue and ongoing lease operations placed “significant stress” on the company’s ability to continue operations, causing it to default on its credit facilities.
The filing details a history of the company, including its turbulent executive suite, lawsuits, and settlements. Even more, the company was subject to a ransomware attack in February 2020, causing significant disruptions to the business for several months, the company said.
The company went through a restructuring in 2019 following a dispute with banks over an alleged default on a $170 million loan impacting a $100 million credit facility. The lawsuit, which only named one of the seven banks overseeing the loan, Bank of America, was voluntarily dismissed later that year.
At that time, founder Carolyn Rafaelian ceded her controlling interest of the company, as well as millions of dollars in stock to Lion Capital. Rafaelian has since started a new venture.
The largest unsecured claim, which Alex & Ani disputes in its court filing, is from Chapel Associated LLC, with a contact listed as the Carpionato Group, for $4.2 million.
Alex & Ani’s filing says it plans to hold an auction of its assets and will seek a stalking horse bidder. The final bid deadline is Aug. 8.
Chris Bergenheim is the PBN web editor. You may reach him at Bergenheim@PBN.com.
