Jeweler Alex and Ani Files Bankruptcy After Rapid Expansion
(Bloomberg) – Jewelry maker Alex and Ani LLC, which operates dozens of stores, filed for Chapter 11 bankruptcy on Wednesday and went on sale.
The company said it has struck a restructuring deal with creditors and shareholders as it strives to revamp and boost its online and wholesale business. The retailer expects “little to no disruption” in operations. Alex and Ani now have around 524 part-time and full-time employees and hold 74 leases, court documents show. About a third of its stores are still closed due to the pandemic.
Alex and Ani’s Delaware filing listed assets and liabilities of $ 100 million to $ 500 million each. Shopping center owners Simon Property Group Inc. and Brookfield Property Partners LP are among its largest unsecured creditors; each owes more than $ 3 million in rent payments. Filing Chapter 11 gives a company relief from its obligations so that it can continue to operate during its restructuring.
Carolyn Rafaelian founded Alex and Ani in 2004 and opened the first store in Newport, Rhode Island, five years later. The company “functions as a symbol of spiritual well-being and connectedness,” restructuring director Robert Trabucco said Wednesday in a court case, but has suffered disruption for years. Rafaelian resigned as CEO in 2019 after Lion Capital increased its stake in the company.
Rafaelian’s father owned a jewelry factory, and she started out selling yarn charm bracelets and making items for private labels. Within a few years, it had 1,000 employees and more than 100 stores and produced nearly 10 million bracelets a year, which ultimately earned the company a valuation of over $ 1 billion.
But rapid growth has come at a price. The company “struggled to keep up with demand” and suffered “significant” management turnover, Trabucco said in the filing. It also struggled with excess inventory, “heavy” leases and inventory management issues that drove its wholesale business to plunge from 59% to 19% in revenue. In February of last year, he was hit by a ransomware attack. The pandemic has further disrupted the business as it closed stores and saw sales plummet.
In 2020, Rafaelian, once dubbed “the bracelet billionaire” by Forbes, lost his business and $ 900 million in net worth. Forbes, who put her on the cover of his act of Richest Self-Made Women, lowered her fortune to around $ 100 million.
The filing comes nearly two years after the company sued Bank of America Corp. for over $ 1 billion, in a lawsuit that accused the bank of fraudulently declaring Alex and Ani in default of a $ 50 million line of credit and leading him to bankruptcy. The bank said it strongly disagreed with the allegations at the time. This case was then dropped in August 2019.
The case is Alex and Ani LLC, 21-10918, US Bankruptcy Court for the District of Delaware.
(Add restructuring plans in second paragraph, background and extracts from court records throughout)
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