Alex and Ani files for bankruptcy
Alex and Ani is looking for a buyer.
The jewelry retailer, best known for its signature expandable charm bangle bracelets, has filed for Chapter 11 bankruptcy. Alex and Ani, which is controlled by London-based Lion Capital, said it has begun looking for buyers for its assets. At the same time, it has entered into a restructuring support agreement with its lenders and equity sponsors that was implemented with the filing. The retailer will continue to operate its currently open stores — it has 74, with about 25 still closed due to the pandemic — and website during the bankruptcy process.
Alex and Ani’s estimated assets and liabilities both ranged from $100 million to $500 million, according to the filing, which was made in the U.S. Bankruptcy Court for the District of Delaware. Simon Property Group Inc and Brookfield Property Partners LP are among the retailer’s largest unsecured creditors with each being owed more than $3 million in rent payments, reported Bloomberg.
Alex and Ani has been struggling for some time and been subject to a high level of executive turnover that started back in 2014. The retailer cited inventory management troubles and a big decline in store traffic as among the reasons for its filing. The company also has been hit with lawsuits from from employees, including one by a former acting chief operational officer seeking over $1 million in damages that still in litigation, according to the filing.
The retailer previously entered into a restructuring agreement in 2019 to avoid defaulting on its obligations and avoid a bankruptcy filing. Its comeback efforts took a hit as a result of the pandemic.
"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 e-commerce platform.” (Approximately 45% of Alex and Ani's sales originate online.)
Trabucco added that, after a thorough review of a number of available options, the Alex and Ani board determined that a Chapter 11 filing was “in the best interests of all parties.” He said that there will be little to no disruption in day-to-day business and operations as a result of the Chapter 11 filing.
"This process and proposed transaction is positive news for our employees, our customers, and our suppliers,” Trabucco continued. “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."