Majors

Alex and Ani Files for Bankruptcy

MajorsJun 11, 2021

Alex and Ani Files for Bankruptcy

The jewelry company, hampered by a rapid expansion and several legal battles, is on the hunt for a buyer.

The Alex and Ani “Armenian Flower” bangle, which benefits The Armenia Fund. The jewelry company filed for Chapter 11 bankruptcy protection late Wednesday.
East Greenwich, R.I.—Alex and Ani filed for Chapter 11 bankruptcy protection late Wednesday and is looking for a buyer, according to court documents.

The jewelry company, famous for its collectible, low-cost bangles, has been struggling under the weight of a rapid expansion and various legal battles.

The company’s estimated assets and liabilities both range from $100 million to $500 million, according to a filing in the U.S. Bankruptcy Court for the District of Delaware.

Mall owners Simon Property Group and Brookfield Property Partners are among its largest unsecured creditors, with each owed more than $3 million.

The company has entered into a restructuring agreement with debt and equity holders, looking to bolster its online and wholesale channels. There should be “little to no disruption” in operations, the company said.

Chief Restructuring Officer Robert Trabucco, who was formerly the chief financial officer of Signet-owned Sterling Jewelers, will head the company’s restructuring process.

In a court filing, Trabucco noted the company has suffered from “adverse macro-trends driving customers away from brick-and-mortar retail.”

Alex and Ani currently holds 74 leases, which will be under review as part of its restructuring plan. Approximately 25 stores are currently closed as a result of the COVID-19 pandemic.

The pandemic took its toll on the company, exacerbating problems that took root a decade ago.

“Alex and Ani’s explosive growth in the early 2010s resulted in certain 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,” said Trabucco in a court filing.

Trabucco gave a rundown of the management changes, beginning with the departure of then-CEO Giovanni Feroce in 2014.

Shortly after, either voluntarily or by request, the company lost its chief financial officer, chief technical officer, chief strategy officer, chief digital officer, acting chief operating officer, assistant general counsel, and its vice presidents of transitional operations, retail, and wholesale.

The turnover led to “a significant loss of institutional knowledge” and employment-related litigation.

Feroce was briefly succeeded by Harlan Kent, whose official title was president, while company founder Carol Rafaelian took over the CEO position.

Kent was there less than a year before he departed and Chief Operating Officer Cindy DiPietrantonio stepped into the role for a brief period. 

After that, Rafaelian was both president and CEO until her departure in 2019. Trabucco followed as interim CEO.

 Related stories will be right here … 
Rafaelian started Alex and Ani in 2004, with its first store opening in Newport, Rhode Island in 2009.

Within just a few years, the company’s wire charm bracelets were a hit and more than 100 Alex and Ani stores popped up across the United States, Canada, and Puerto Rico.

In 2018, Rafaelian and private equity firm Lion Capital LLP, then a minority shareholder, worked out a restructuring plan to prevent the jewelry company from defaulting on its credit obligations.

When Lion Capital increased its stake in the company in 2019, Rafaelian stepped down as CEO.

Prior to Rafaelian’s departure, the company filed a lawsuit against Bank of America in July 2019, accusing the bank of discriminatory lending practices against a women-led company and asking for $1 billion in damages.

The bank disputed the allegations and the case was dropped the following month.

The jewelry company also found itself in a complicated legal battle with Sterling Jewelers, which included more than a year of litigation and back-and-forth breach of contract claims

That case was dismissed with prejudice in February 2019.

The bankruptcy case is Alex and Ani LLC, 21-10918, U.S. Bankruptcy Court for the District of Delaware.
Lenore Fedowis the associate editor, news at National Jeweler, covering the retail beat and the business side of jewelry.

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