CRANSTON – Alex and Ani LLC’s lawsuit filed Thursday against Bank of America N.A. alleged that the bank’s declaration of a default on a loan has caused the valuation of Alex and Ani to decline by several hundred million dollars.
The 30-page complaint contains several allegations of sexism, ageism and mismanagement on the part of Bank of America and former Alex and Ani Chief Financial Officer Bob Woodruff – who left the company in 2017 along with former President Cindy DiPietrantonio.
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The company’s C-Suite makeup has been volatile over the years.
Woodruff joined the company in September 2016. DiPietrantonio had replaced Harlan Kent, who stepped down from the position of president in 2016.
Former gubernatorial candidate Giovanni Feroce had served as the company’s CEO until his ouster in 2014 – part of a company-wide shakeup – with founder Carolyn Rafaelian taking over the role as head of the company.
The lawsuit’s allegations claim that bias against women led the bank to issue a default on a $170 million loan and freeze a revolving $50 million credit facility – causing the company significant financial distress, “driving Alex and Ani towards bankruptcy and milking it for literally millions of dollars in fees.”
The suit said that the declared default violated its loan agreement with Bank of America – as the company argued that it never defaulted on its loan.
The lawsuit, which asserts that Bank of America engaged in ageist and sexist lending practices as well as sexist business practices detrimental to the Cranston-headquartered jewelry company, is seeking more than $1 billion in damages.
Bank of America spokesman Bill Halladin told PBN that Bank of America is only one of seven banks in a syndicate that holds the loans. He said that beyond the allegations, the premise of the suit doesn’t hold, as “Bank of America is just one of the banks and does not independently make those decisions” to determine the loan in default. Instead the decision is made by the entire group of banks.
Bank of America previously has denied the allegations of sexism and said that the syndicate of banks already has been working to resolve Alex and Ani’s “serious financial challenges” which it said have existed at least for two years.
Bank of America is the administrative agent over the loans – overseeing the coordination of itself and the six other banks involved in the credit extension.
It wasn’t immediately clear who the six other banks in the loan are. However, it was confirmed that the banks are still involved in the long-term loan.
Bank of America received its summons from the U.S. District Court of the Southern District of New York Friday. The company has 21 days to file a response to the court – otherwise it would be served a default judgement for the complaint. The company is expected to file a response.
Alex and Ani also alleged in the suit that Bank of America sought to wrest control of the company away from Rafaelian and her Chief Financial Officer Andrea Ruda on the basis that they were women. The complaint describes Ruda as a “young, no-nonsense” chief financial officer who is “driven to cut costs and trim the fat.” The suit also alleges that Bank of America discriminated against Ruda for being young at the time of the alleged infractions.
The suit said that Bank of America wanted to bring in a third-party consultant to assess a restricting plan as well as a chief restructuring officer to oversee the implementation. The company said that Ruda already was overseeing a restructuring as chief financial officer – which it argued would have saved the company millions on fees.
The suit also alleges internal mismanagement during Woodruff’s tenure at the company, including that he hid financial information about the company from Rafaelian. The suit also alleged that Woodruff engaged in bad business deals, including accepting high fees from Bank of America.
The lawsuit claims that to date, the default has resulted in $80 million in negative sales. The company also said that it has 1,500 employees in the United States, whose jobs, it argues, rest in the balance of restarting its revolving credit line – and regaining punitive damages against the lender.
The company was not immediately available to answer questions on whether it expected to declare bankruptcy or not, or whether the financial stress it is under has caused any layoffs or store closures, nor whether it was planning to sue the other banks in the syndicate.
Chris Bergenheim is the PBN web editor. You may reach him at Bergenheim@PBN.com.
