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Alex and Ani, LLC – Lifestyle Jeweler Files Chapter 11 with $155mn of Debt, Executes RSA with Controlling Shareholder Lion Capitol and Entity Controlled by Celebrity Lawyer Mark Geragos; Closes Further Stores and Will Pursue Asset Sale


June 9, 2021 – Alex and Ani, LLC and eight affiliated Debtors (“Alex and Ani” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 21-10918 (Judge TBD). The Debtors, an "American lifestyle brand that creates jewelry to empower and connect humanity," are represented by Domenic E. Pacitti of Klehr Harrison Harvey Branzburg LLP. Further board-authorized engagements include (i) Kirkland & Ellis LLP as general bankruptcy counsel, (ii) Portage Point Partners, LLC as investment bankers and financial advisors and (iii) Kurtzman Carson Consultants LLC as claims agent. 

The Debtors’ lead petition notes between 200 and 1,000 creditors; estimated assets between $100.0mn and $500.0mn; and estimated liabilities between $100.0mn and $500.0mn (including $124.7mn of funded debt and $29.1mn of unsecured trade claims). Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) Chapel Associates II LLC ($4.2mn disputed rent claim), (ii) Simon Property Group, Inc. ($3.9mn disputed rent claim) and (iii) Brookfield Properties Retail, Inc. ($3.2mn disputed rent claim).


  • Rhode Island-based lifestyle jeweler files Chapter 11 with $124.7mn of funded debt and $29.1mn of trade debt
  • Bricks and mortar revenue plummets with e-commerce platform now representing 45% of revenue
  • Cites impact of operational Issues (Inventory management, revolving door C-Suite and unsustainable rental costs) and COVID-19
  • Controlling shareholder Lion Capital purchases prepetition debt from Bank of America, sells on 35% to entity controlled by celebrity lawyer Mark Geragos
  • Lion Capital, founder Carolyn Rafaelian and Geragos-controlled "The Bathing Club" execute RSA and settlement agreement
  • Debtors close an additional 25 stores "as at Petition date" (having earlier closed 37 stores) and will look to close more
  • Debtors initiate going concern Section 363 sales process without stalking horse, as part of dual track strategy; aim for August 15th auction

In a press release announcing the filing, Alex and Ani  stated: "[t]he Company has entered into a Restructuring Support Agreement ('RSA') with its debt holders and equity sponsors regarding a comprehensive financial and operational restructuring. 

Contemporaneously with the Chapter 11 filing, the Company commenced a marketing process, pursuant to which parties will have the opportunity to submit competing bids for the purchase of the Company's assets.  At the same time, the Company's lenders and equity sponsors have agreed to the terms of a comprehensive standalone restructuring that will serve to ensure go-forward operations remain intact.

Alex and Ani has taken significant steps toward financial health through realignment of sales channels, reducing retail footprint, and reductions in capital expenditures and working capital.

Alex and Ani intends to continue operating its currently open stores and its website as usual during the court-supervised process."

Goals of the Chapter 11 Filings

The Trabucco Declaration (defined below) provides: “Alex and Ani commences these chapter 11 cases to deleverage its balance sheet and continue as a going concern with the support of 100 percent of its first, second, and third lien lenders, and 100 percent of its equity holders."

Restructuring Support Agreement and Settlement

The Debtors, majority shareholder Lion Capital and the Debtors' founder Carolyn Rafaelian (through entities controlled by her, the "Rafaelian Entities") have entered into a restructuring support agreement (the “RSA,” attached to Docket No. 17 as Exhibit A) which contemplates, inter alia, a standalone restructuring and dual-track marketing process, supported by consensual access to cash collateral. During the course of negotiating the RSA, the Debtors, Lion Capital, and Ms. Rafaelian (collectively, the “Support Parties”) negotiated a comprehensive settlement agreement of all outstanding disputes (the “Settlement”). The Settlement, as incorporated into the RSA, provides for, inter alia: (a) Ms. Rafaelian’s sale of her 35 percent interest under the Second Lien Credit Facility to The Bathing Club LLC (the “Purchaser”); (b) Lion Capital’s sale to Purchaser of 35 percent of the face amount of the first lien obligations under the First and Third Lien Credit Agreement; (c) the dismissal and withdrawal of certain outstanding litigation with prejudice; and (d) mutual releases. 

So, who is the Purchaser? The RSA stipulates that notices are to be sent to Mark Geragos at law firm Geragos & Geragos, a litigation boutique renowned for its representation of celebrity clients (he is quoted in respect of client/rapper Chris Brown  "[he is] like a son and an annuity [to me]") and which formerly represented Ms Rafaelian and the Rafaelian Entities. Ms Rafaelian is also, thanks to introductions by Mr Geragos, involved in a number of projects/investments with rap/hip-hop entrepreneurs (eg partnership with with Ice Cube's BIG3).

The Settlement Agreement notes: " All Parties represent and warrant that they have been informed that Mark J. Geragos, controlling member of The Bathing Club LLC, previously represented and currently represents certain Parties to this Agreement in matters unrelated to this Agreement."

Restructuring Overview

The key terms of the restructuring are as follows: 

  • Debt for Equity Conversion. A “toggle” plan, whereby the Company will pursue a stand-alone restructuring backed by the Support Parties contemporaneously with the sale process in the event that the sale process is unsuccessful. 
  • Marketing Process. A 60-day public marketing process for the sale of some or all of the Company’s assets (the “Sale Transaction”) in accordance with the terms of the Bidding Procedures.
  • Cash Collateral. Consensual access to cash collateral in exchange for certain customary adequate protection for existing secured creditors, and prosecution of these cases in accordance with the milestones set forth below.
  • Milestones. Prosecution of these cases in accordance with the following timeline: 
    • entry of the Interim Cash Collateral Order within five days of the Petition Date; 
    • occurrence of the Initial Bid Deadline within 28 days of the Petition Date; 
    • the Court holding a hearing regarding approval of the Disclosure Statement Order, Bidding Procedures Order, and the Final Cash Collateral Order within 40 days of the Petition Date; 
    • entry of the Disclosure Statement Order, Bidding Procedures Order, and the Final Cash Collateral Order within 42 days of the Petition Date; 
    • occurrence of the Final Bid Deadline within 60 days of the Petition Date; 
    • holding an auction pursuant to the Bidding Procedures Order within 67 days of the Petition Date; 
    • the Court holding a hearing regarding entry of the Confirmation Order or approving the Sale Transaction within 78 days of the Petition Date; 
    • entry of the Confirmation Order or the Sale Order, as applicable, within 80 days of the Petition Date; and 
    • occurrence of the plan of reorganization’s effective date within 95 days of the Petition Date.
  • Lease Rejection. Evaluation of the Company’s existing lease portfolio and rejection of uneconomic leases to rebalance the Company’s lease portfolio.
  • Settlement of Existing Litigation. Subject to approval of the Settlement, Ms. Rafaelian, on the one hand, and the Company and Lion, on the other, will provide mutual releases.

Marketing Efforts

The Trabucco Declaration provides on the Debtors' nascent sales process: "The Debtors’ financial advisor, Portage Point Partners, LLC ('Portage Point'), began a marketing process on the Petition Date. The Debtors developed a list of approximately 165 parties whom they believe may be interested in, and whom the Debtors reasonably believe would have the financial resources to consummate, a Sale. The list of parties includes both strategic and financial investors (collectively, the 'Contact Parties'). As of the date hereof, the Debtors will distribute a teaser to the Contact Parties and expect to execute confidentiality agreements with certain Contact Parties in the next few days. Portage Point and the Debtors will work with all interested parties and any additional parties to provide all diligence and will continue to actively seek potential interested purchasers." The Debtors bidding procedures notes an anticipated auction date of August 15, 2021.


The Debtors are party to approximately 74 leases for stores across the United States, Canada, and Puerto Rico. Approximately 25 of the Debtors' leased locations are currently closed as a result of the COVID-19 pandemic. The Debtors' "brick-and-mortar segment generally has been unprofitable since early 2020 due to the industrywide challenges faced by brick-and-mortar stores."

The Company leases all of its store locations and offices, including its combined headquarters and distribution center in East Greenwich, Rhode  Island. The aggregate annual occupancy costs of its current lease footprint is approximately $12.7mn. 

The Trabucco Declaration adds: "Before the Petition Date, the Debtors' management team and advisors undertook an extensive analysis of the Company’s existing store footprint to determine if (and how many) stores the Company should permanently close in connection with its broader financial and operational restructuring initiatives. The Debtors ultimately determined that it was advisable to permanently close 37 store locations that the Company determined in its business judgment were unprofitable under the current lease terms, including 12 store locations for which the applicable lease had terminated or expired as of the Petition Date and an additional 25 store locations that were closed as of the Petition Date. The Debtors will file a motion seeking authorization to reject certain leases in connection with the store closings…"


The Debtors have "maintained a robust and interactive online presence over the last several years. Today, approximately 45 percent of the Company’s total sales originate through e-commerce. Online sales are conducted primarily through the Company’s brand-specific website, alexandani.com."

Events Leading to the Chapter 11 Filing

In a declaration in support of the Chapter 11 filing (the “Trabucco Declaration ”), Robert Trabucco, the Debtors’ Chief Restructuring Officer, detailed the events leading to Alix and Ani’s Chapter 11 filing, essentially the confluence of operational issues pre-COVID and then the COVID pandemic.

The Trabucco Declaration  provides: “Alex and Ani has recently suffered from adverse macro-trends driving customers away from brick-and-mortar retail, like many other retailers. Moreover, 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. 

Despite the Company’s growth between 2010 and 2015, it ran into a series of operational challenges beginning in 2016, including surplus inventory and burdensome long-term leases. The Company also  faced challenges with respect to inventory management, which inhibited its ability to fulfill a large percentage of wholesale orders.  As a result, the Company’s wholesale business declined from 59 percent of total revenue in 2015 to 19 percent of total forecasted revenue for 2021. Additionally, the general shift in consumer preferences away from brick-and-mortar stores led to a decrease in foot traffic and sales in the Company’s stores and at authorized retailers. These operational challenges were compounded by significant overturn in the Company’s executive management team.

prior to the 2019 Restructuring, the Company’s revenue dropped from its peak of approximately $340 million in 2015 to approximately $224 million in 2018 due to operational difficulties. Moreover, tensions within the Company exacerbated the effects of these challenges as the Company experienced significant management turnover, which in turn impacted its customer and vendor relationships.

In late 2018, the Company, its then-existing lenders, Ms. Rafaelian (the then-majority equity owner), and Lion Capital (the then-minority equity owner) engaged in restructuring negotiations in the face of the default and acceleration of its credit facility and the suspension of access to its revolving credit facility. The lenders, led by then-administrative agent Bank of America, ultimately agreed to waive all outstanding defaults and subordinate a portion of the secured facility to a new $20 million second lien facility provided by Lion Capital and an entity owned by Ms. Rafaelian. In connection with the transactions, which closed in September 2019 (the '2019 Restructuring'), Ms. Rafaelian stepped down as Chief Executive Officer and I was subsequently appointed Chief Restructuring Officer and Interim Chief Executive Officer. Lion Capital became the Company’s majority shareholder. 

Shortly after closing the 2019 Restructuring, the COVID-19 pandemic forced the Company to close all of its stores in the spring of 2020, resulting in a massive drop in revenue. The Company took immediate steps in response, including furloughing employees and otherwise minimizing operating expenses. Continued depressed revenues, however, coupled with the Company’s ongoing lease obligations throughout the pandemic, placed significant stress on the Company’s ability to operate and service its debt obligations. 

In 2020 and 2021, the Company once again defaulted under the Bank of America-led credit facilities. Following discussions with the Company’s lenders, it became clear that the lenders were unwilling to continue supporting the Company as a going concern. As a result, Lion Capital engaged in discussions with the lenders that ultimately led to the consummation of a transaction to acquire all of the Company’s outstanding first and third lien obligations.”

Prepetition Indebtedness

The Debtors have approximately $127.4mn in the aggregate principal amount of outstanding funded debt obligations, including capitalized interest, consisting of approximately $20.4mn under the First Lien Credit Facility, approximately $25.2mn under the Second Lien Credit Facility, and approximately $81.8mn under the Third Lien Credit Facility. The current capital structure results from the Company’s 2019 out-of-court restructuring, which subordinated a portion of its existing debt to the new Second Lien Credit Facility, thereby creating the “synthetic” Third Lien Credit Facility. The following table summarizes the Company’s outstanding funded debt obligations as of the Petition Date:

In addition to funded debt obligations, the Company has outstanding unsecured trade debts (e.g., amounts owed to trade vendors, suppliers, landlords) that total approximately $29.1mn as of the Petition Date and other contingent and unliquidated unsecured obligations related to outstanding litigation.

Sale of Prepetition Debt to Lion Capital

The Trabucco Declaration provides: "The Company defaulted under the First and Third Lien Credit Agreement in July 2020 and again in October 2020 as a result of its failure to comply with certain reporting and operational requirements and financial covenants. While the Company originally secured a waiver of these defaults, this prompted ongoing dialogue between the Company and Bank of America, as then-administrative agent, regarding a more comprehensive restructuring. It became clear as part of these conversations that the First Lien Lenders were not interested in supporting a comprehensive restructuring, and no longer intended to support the Company as a going concern. 

In February 2021, Bank of America declared another default and accelerated all obligations under the First and Third Lien Credit Agreement following the Company’s failure to remit certain amounts and comply with certain reporting requirements and financial covenants thereunder. At this time, the First Lien Lenders insisted on a sale of the Company that would allow for repayment of their outstanding debt. In light of this position, Lion Capital—who was interested in supporting the Company through a restructuring—entered into negotiations with the First Lien Lenders to purchase all outstanding debt under the First Lien Credit Facility and the Third Lien Credit Facility. 

On May 26, 2021, the First Lien Lenders sold and assigned all obligations under the First Lien Credit Facility and the Third Lien Credit Facility to Lion Capital and the Borrower permanently terminated the Revolver. Concurrently with the sale and assignment, Wilmington Trust, National Association was appointed as successor agent under the First and Third Lien Credit Agreement."

About the Debtors

According to the Debtors: “ALEX AND ANI creates meaningful, eco-conscious jewelry and accessories to positively empower and connect humanity. Carolyn Rafaelian, Founder, CEO, and Chief Creative Officer designs each piece. Carolyn believes that every individual has their own positive energy to share with the world. By incorporating powerful symbolism and personal meaning into each product, ALEX AND ANI provides a wearable and beautiful way for consumers to express their individuality.  The company is passionate about the wellbeing of our planet, our communities, and our individual paths. ALEX AND ANI uses recycled materials with eco-conscious processes. Its CHARITY BY DESIGN division has strengthened non-profit organizations through innovative partnerships and collaborative experiences, resulting in donations of more than $52 million. An Inc. 500 Company, ALEX AND ANI has retail stores as well as retail partners worldwide. ALEX AND ANI products are proudly designed and crafted in America and made with love. The company's World Headquarters is located in the greater Providence, Rhode Island area. 

The Trabucco Declaration adds: "Founded in 2004 by Carolyn Rafaelian, Alex and Ani has become a premier jewelry brand, quickly gaining popularity because of the novel and customizable nature of its signature expandable wire bracelet. Alex and Ani has been headquartered in East Greenwich, Rhode Island since 2014. Since opening its first retail store in Newport, Rhode Island in 2009, Alex and Ani has expanded to over 100 retail store locations across the United States, Canada, and Puerto Rico. Alex and Ani also maintains a vibrant and growing e-commerce presence. With a loyal customer base, Alex and Ani operates as a symbol of spiritual wellness and connectivity that seeks to highlight the individuality of each of its customers."

Corporate History and Structure Chart

The Debtors were wholly owned by Ms. Rafaelian until 2012, at which time she sold a 40 percent interest to San Francisco-based private equity firm JH Partners. JH Partners sold its interest to LC A&A Holdings, Inc., an affiliate of London-based private equity firm Lion Capital LLC (together with its affiliates LC A&A Holdings, Inc. and LC A&A Intermediate Investors LLC, “Lion Capital”), approximately two years later. LC A&A Holdings, Inc. increased its ownership to approximately 58.75% in connection with the 2019 Restructuring. As of the Petition Date, the equity units of debtor A and A Shareholding Co., LLC (“A&A Shareholding”), the ultimate parent entity, are held 58.75 percent and 41.25 percent by LC A&A Holdings, Inc. and Ms. Rafaelian (through A&A Pledge Co.), respectively.


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The post Alex and Ani, LLC – Lifestyle Jeweler Files Chapter 11 with $155mn of Debt, Executes RSA with Controlling Shareholder Lion Capitol and Entity Controlled by Celebrity Lawyer Mark Geragos; Closes Further Stores and Will Pursue Asset Sale appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.

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