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David’s Bridal Bankruptcy: 294-Store Chain Says Chapter 11 Could Lead to Liquidation

Roughly three dozen fabric suppliers and manufacturers from China and Myanmar to Vietnam and Sri Lanka are caught in the cross-hairs of David’s Bridal bankruptcy, and could wind up in truly dire straits if the bridal giant ends up liquidating.

The wedding and special occasion fashion retailer filed for Chapter 11 bankruptcy in a New Jersey court on Sunday after it failed to come up with a buyer. The 294-store-chain’s next options could include selling off valuable assets or liquidating everything if all else fails, dealing a blow to the 30 mostly Asian vendors that supply the company with dresses, accessories and more.

CEO James Marcum said the company began a “robust marketing process” in February to put itself up for sale with the help of investment banker Houlihan Lokey Capital, according to court documents. None of the potential bidders stepped up as a going-concern buyer, although several who expressed interest in some of the assets, including trademarks for David’s Bridal, DB Studio, Galina, Galina Signature, Melissa SWeet, Oleg Cassini, Jules & Cleo, and Fifteen Roses.

David’s Bridal will operate with a “new, scaled down” skeleton crew while the bankruptcy case moves through the legal system. It’s cutting stores, expenses and even more staff after it already laid off more than 9,000 of its 10,000 employees, including 2,000 full time workers.

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“While the Debtors will continue to conduct a sale process at the outset of these chapter 11 cases, if the Debtors are unable to implement a going-concern transaction, the Debtors will turn to an orderly liquidation of their remaining assets, including the sale of distinct assets separate from the Debtors’ operations,” Marcum said, per court documents.

David’s Bridal has lined up Gordon Brothers Retail Partners (GB) to liquidate store inventory if it’s forced to fully wind down. Marcum said the company “will quickly pivot to cease store closings” if a buyer turns up.

For now, stores remain open and the retailer will continue to fulfill customer orders while it tries to find a “stalking-horse bidder.” The company submitted bidding proposals for its planned court-approved asset auction. Interested parties have until May 30 to turn in binding bids, before the auction begins June 1. A sale hearing for the court to approve buyers is set for June 5.

The Conshohocken, Penn.-based retailer operates in 49 states as well as Canada and the U.K. alongside franchised locations in Mexico.

David’s Bridal’s overseas partners include four joint ventures (JV) operating out of Hong Kong. Marcum said 87 percent of the sourcing is conducted through these JVs.

“The scale and efficiency of the Debtors’ vertically integrated, asset-light supply chain provides it with the capabilities to design and produce high quality bridal fashions at a low cost, the benefits of which are then passed on to the consumer as part of David’s Bridal’s overall value proposition,” Marcum said. “The Debtors’ supply chain provides the ability to distribute these fashions globally in a timely and efficient manner to customers whose events demand a high level of precision.”

David’s Bridal receives over 425 million page views annually, and has 15 million e-mail subscribers on top of ore than 1.2 million SMS subscribers. It has about 2.6 million active social media followers. It also has 2.1 million active members in its Diamond Loyalty Program.

Marcum said that about 25 percent of U.S. brides get married in a David’s Bridal gown and that the 73-year-old retailer dresses about 1 million bridesmaids every year. According to Marcum, 17 percent of the business is bridal gowns, with prices ranging from $199 to over $2,000, while bridesmaids dresses clock in at 39 percent of the total revenue base. Sixteen percent of sales is occasion wear, such as options for the mother of the bride, formal events and quinceañeras.

The retailer was saddled with debt after a $1.05 billion leveraged buyout in 2012 by private equity firms Clayton Dubilier & Rice and Leonard Green & Partners. It worked out a deal with lenders to shed $450 million in debt and filed a pre-packaged Chapter 11 in 2018 before exiting two months later newly owned by its lenders.

Some were worried that David’s Bridal didn’t take full advantage of bankruptcy by focusing on a financial restructuring instead of a soup-to-nuts operational reboot to better meet the future. The company at the time said there was no need to close stores because they were profitable, even though it was still left with over $700 million in debt.

Marcum addressed this concern in the court documents, noting that the timing of the prior Chapter 11 case occurred during the peak sale period when brides typically place orders for summer and fall events.

And one year later, the Covid-19 pandemic hit.

While Marcum said the pandemic created disruption in the retail industry, shifts in consumer behaviors, such as the overall casualization in wedding events, also hurt sales. This shift impacted the demand for more traditional wedding gowns and formal attire, which impacted the retailer’s revenue. He added that inflationary pressures led to higher inventory and operating costs across its store base. Liquidity constraints, and upcoming interest payments on its debt, pushed the company to consider strategic options in the Fall of 2022.

In addition to David’s Bridal, five affiliates, including David’s Bridal Canada Inc., also filed Chapter 11 petitions. The retailer expects to filed a recognition proceeding in Canada, and a subsidiary in the U.K. is expected to begin an administration proceeding. Marcum said the company has total funded debt of $256.9 million, comprised of four term loans and one asset-backed revolving loan. The petition listed estimated assets and liabilities each at between $100 million to $500 million.

Among its top 20 unsecured creditors, at the top of the list is United Parcel Service, Philadelphia, Penn., owed $1.3 million. Other service providers include Google Inc., San Francisco, Calif., $923,341, Microsoft Corp., Dallas, Tex., $797,611, and Meta Platforms Inc., Chicago, Ill., $293,077. Financial service firm CIT Group/Commercial Services, Charlotte, N.C., is owed $731,588. Fashion vendors on the top two list include RM Richards, New York, N.Y., $980,820, and Bridal Veil Co. Inc., Brooklyn, N.Y., $157,674.