Under the weight of more than $11 million in debt, without access to operating funds, with the loss of its two brand icons, and without even a name to operate under, the former House of Taylor executed a “Peaceful Possession of Collateral” with the lending company that has been financing its survival.
New Stream Secured Capital L.P., Ridegfield, Conn., now owns what’s left of the West Hollywood, Calif.-based jewelry company. It owed the specialty financial company nearly $11.2 million plus interest, commissions, costs, expenses, attorneys’ fees, and other charges or contractual obligations.
The jewelry company announced the executed agreement in an 8K filing with the Securities and Exchange Commission Wednesday.
The filing came a day after the company announced in an SEC filing that Dame Elizabeth Taylor and Kathy Ireland terminated their licensing agreements, saying that the company is insolvent and Lyle M. Rose, president and chief executive officer, left the company after it failed to pay his salary.
Losing Taylor meant losing the Taylor name. The name loss was reflected in Wednesday’s SEC filing. In the Peaceful Possession of Collateral letter, the company was referred to as “Debtor.”
Taylor and Ireland were among the principal shareholders and were the identity for the company, which specialized in the manufacturing, marketing, and distribution of jewelry under the "Elizabeth," "House of Taylor Jewelry," and "Kathy Ireland Jewelry" brands; as well as the sale of loose diamonds.
The other principal shareholders, Jack Abramov, the former chairman, president, and chief executive officer, and Monty Abramov, former secretary and vice president, resigned from their positions in April.
In addition, the company said in its Tuesday’s filing that it was in default of its loan with New Stream. All funds received by the company were deposited into a restricted account of New Stream to which it has no access. To maintain operations, House of Taylor wasdependent on funds that New Stream advances against a percentage of available collateral as determined under the Loan Agreement.
House of Taylor said that New Stream has substantially "over-advanced" the company against the available collateral of inventory and accounts receivable.
The Peaceful Possession of Collateral letter was signed by Bob Rankin, chief financial officer and operating officer for the jewelry company; and Donald Porter, managing partner of New Stream. The letter states that both parties waive all rights under common or statutory law. The letter reads in part:
As of June 23rd, 2008, the Debtor is indebted to Lender pursuant to the Financing Agreements in an amount of not less than $11,182,220.19, plus interest accrued and accruing thereon, plus the commissions, costs, expenses, attorneys’ fees and other charges or contractual obligations now or hereafter payable by the Debtor to Lender under the Financing Agreements, plus all amounts which may be paid by Lender in connection with the sale or other disposition of the Debtor’s assets, plus all other Obligations, all of which are owed by the Debtor to Lender (hereinafter, the “Obligations”);
Lender has and shall continue to have, valid, enforceable and perfected first liens upon and security interests in certain of the Debtor’s personal property, including, without limitation, all of the Collateral, which liens and security interests secure payment and performance of all of the Obligations in accordance with the terms of the Financing Agreements
The Debtor hereby acknowledges and agrees that the Debtor is in default under the Financing Agreements and in the payment of its Obligations to Lender which entitles Lender to exercise immediately its rights and remedies under the Financing Agreements, applicable law and otherwise. Lender has not waived, presently does not intend to waive, and does not hereby waive, any such defaults and nothing contained herein or the transactions contemplated hereby shall be deemed to constitute any such waiver.
The Debtor hereby confirms that the Debtor does not have sufficient working capital to continue its business or the means to protect the Collateral.
The Debtor hereby waives all of its rights to notification or otherwise under Section 9-611 of the Uniform Commercial Code (“UCC”) as to the sale or other disposition by Lender of the Collateral, under Section 9-620 of the UCC regarding acceptance of the Collateral as discharge of the Obligations, under Section 9-623 of the UCC regarding the Debtor’s right to redeem the Collateral.
In addition, the Registrant agrees to:
The Debtor hereby surrenders, delivers and grants to Lender peaceful possession of the Collateral wherever located, and the products and proceeds thereof. Such surrender and delivery of such Collateral to Lender is in recognition of the rights of Lender as a secured party under the UCC and other applicable law. The Debtor knowingly waives any rights such Debtor may have to notice and a hearing before any court of competent jurisdiction and consents to Lender’s possession, sale, transfer, license or other disposition of or realization on the Collateral. The Debtor agrees that Lender may, at any time, take such action as it may deem appropriate with respect thereto, and Lender may, at any time, exercise its rights to dispose of any and all such Collateral as provided for under the Financing Agreements and applicable law, without prejudice to all of the rights of Lender. All proceeds of the Collateral received and retained by Lender shall be applied by Lender to the Obligations in such order and manner as Lender shall determine. Debtor shall be and remain liable for any deficiency until all Obligations are fully and indefeasibly paid and satisfied. Nothing herein will limit or be deemed to limit any rights or interests of Lender with respect to Collateral not expressly surrendered, delivered, or granted to Lender hereunder. After the date hereof, the Debtor shall continue to cooperate with Lender in all respects concerning the surrender, disposition and realization of the Collateral.
The Debtor will execute and deliver to Lender notification letters signed by the Debtor addressed to such of the Debtor’s Account Debtors as Lender shall require, or at Lender’s option, addressed in blank, to be completed, and/or sent by Lender hereafter from time to time, directing payment to Lender of the Debtor’s Accounts or other monies due to Debtor.