April 17, 2023 – David's Bridal, LLC and five affiliated debtors (“David's Bridal” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of New Jersey, lead case No. 23-13131 (Judge Christine M. Gravelle). The Debtors, "the nation's leading bridal and special occasion authority*," are represented by Michael D. Sirota of Cole Scwartz LLC. Further Board authorized appointments include: (i) Kirkland & Ellis LLP as general bankruptcy counsel, (ii) Berkeley Research Group, LLC (“BRG”) as financial advisors, (iii) Houlihan Lokey Capital as investment bankers, (iv) Gordon Brothers to assist with inventory sales and (v) as Omni Agent Solutions as claims agent.
*As at filing, the Debtors and their nondebtor subsidiaries operate 294 stores across the United States, Canada, and United Kingdom and franchise 8 stores in Mexico. The Debtors are headquartered in Conshohocken, Pennsylvania and currently employ approximately 10,000 employees.
The Debtors’ lead petition notes between 25,000 and 50,000 creditors; estimated assets between $100.0mn and $500.0mn; and estimated liabilities between $100.0mn and $500.0mn ($256.9mn of funded debt). Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) UPS – United Parcel Service ($1.3mn trade debt claim), (ii) RM Richards ($1.0mn trade debt claim) and (iii) Google Inc. ($923k trade debt claim).
Filing Date Highlights
- Wedding Specialist Back in Chapter 11 for Second Time in Under Four Years with $259.9mn of Funded Debt
- Cites "Casualization" of Wedding Events as Well as COVID and Liquidity-Driven Constraints on Management Initiatives as Forcing Chapter 22
- Will Ostensibly Continue to Pursue Failed Out-of-Court Going Concern Sale Effort…In-Court, But Clearly Poised to Morph "Strategic Management of Inventory" Workstream into Full-Blown Liquidation Operation
In a press release announding the development, the Debtors provide: "Prior to today's announcement, David's Bridal initiated an evaluation of a wide range of strategic alternatives to maximize value for all stakeholders, including a marketing and sale process for its assets. In light of its liquidity constraints, the Company was unable to finalize its marketing and sale process out of court and intends to continue exploring a sale of all or some of its assets pursuant to section 363 of the Bankruptcy Code. Alongside these efforts, the Company is also strategically managing inventory and evaluating its physical footprint to maximize value and the prospect of a successful going concern transaction.
The Company expects to file a recognition proceeding in Canada and a subsidiary of David's Bridal expects to commence an administration proceeding for its business in the United Kingdom."
James Marcum, the Debtors' Chief Executive Officer, commented: "…our business continues to be challenged by the post-COVID environment and uncertain economic conditions, leading us to take this step to identify a buyer who can continue to operate our business going forward."
Previous Chapter 11
In a declaration in support of first day filings (the “Marcum Declaration), James Marcum, the Debtors’ CEO commented: “On…January 18, 2019, the Debtors successfully emerged from the Prior Chapter 11 Cases, deleveraging their balance sheet by approximately $434 million….Notwithstanding…the Company is suffering under severe liquidity constraints brought on by a confluence of adverse macroeconomic trends and industry specific headwinds, including the lasting impact of COVID-19 on the wedding industry….A confluence of factors contributed to the Debtors’ need to commence these chapter 11 cases. First, internal factors, including the liquidity needs of the Company to support its significant operating expenses, and disruptions to management initiatives, have impaired the Debtors’ liquidity. Second, the impact of the COVID-19 pandemic, as well as the significant shift in the competitive landscape due to the disruption in the retail industry, has led to a decrease in sales. Finally, shifts in consumer behaviors have contributed to the elongation of wedding planning cycles and an overall casualization in wedding events, thereby affecting the demand for more traditional wedding gowns and formal attire, all of which have further reduced the Debtors’ revenue.
FN4 “Term Loan Priority Collateral” includes, among other things, the Debtors’ equipment, fixtures, real property, intellectual property, all assets other than ABL Priority Collateral, and proceeds of the foregoing.
About the Debtors
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The post David’s Bridal, LLC – Leading “Bridal Authority” Back at Chapter 11 Altar for Second Time in Four Years Citing Lingering Impact of COVID and “Uncertain Economic Conditions”; Will Continue Asset Sale Efforts In-Court and “Evaluate Physical Footprint” appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.