After ousting its founder in the wake of a restructuring and billion-dollar lawsuit accusing Bank of America of gender discrimination, Alex and Ani has filed for bankruptcy.
Once valued at roughly $1 billion, the accessories retailer that catapulted to acclaim in 2004 when actor Gwyneth Paltrow donned a custom-designed apple necklace marking the birth of her daughter (named for the fruit) has seen its fortunes fade in recent years.
Last year, Alex and Ani removed founder Carolyn Rafaelian from her post as CEO of the company she named 17 years ago for her eldest two daughters. The move in May of 2020 came after the chain withdrew a $1.1 billion lawsuit in July 2019 hurling accusations of gender discrimination at Bank of America, which two months later agreed to lead parties in a new debt structure. The suit had also charged that BoA wrongly placed a $170 million loan in default and froze a $50 million credit line.
Like others in retail, after building out a robust wholesale business, Alex and Ani in 2018 sought to grow its direct-to-consumer reach, at one point planning to expand with more than two dozen owned retail stores—though the pandemic likely curtailed those ambitions.
On Wednesday, the accessories retailer filed a Chapter 11 petition in a Delaware bankruptcy court under the name A and A Shareholder Co. LLC, listing assets and liabilities each at between $100 million to $500 million. Eight other subsidiaries under the Alex and Ani name also filed petitions. A subsidiary, Alex and Ani LLC, which is owned by A and A Shareholder Co. LLC, has been given lead case status for the bankruptcy.
LC A&A Intermediate Investors LLC, in the U.K., holds a 58.75 percent interest in the parent company, and Alex and Ani Pledge Co., in Providence, R.I., controls a 41.25 percent stake in the bankrupt company. LC refers to the stake held by Lion Capital.
According to the bankruptcy petition for the parent company, 17 of the top 30 unsecured creditors were landlords seeking compensation for unpaid rent for the company’s dozens of stores, though these claims were listed as disputed. Chapel Associates II LLC, of Johnston, R.I. is asking for $4.1 million, while Indianapolis mall giant Simon Property Group Inc. has a claim for $3.9 million and fellow shopping center icon Brookfield Properties Retail Inc. of Chicago is seeking $3.3 million. Ten of the creditors were for trade claims, including FedEx, Microsoft and Iheartmedia Inc. Three creditors were owed charitable donations.