Alex and Ani founder and former CEO Carolyn Rafaelian has lost a New York State legal battle against Lion Capital, the London-based investment house that now owns the charm company.
On Oct. 28, New York Judge Jennifer Schecter ruled that “there is no question” that Rafaelian owes Lion Capital $5 million as a result of the company’s restructuring last year.
According to court documents, in 2015, Lion Capital acquired 40% of Alex and Ani. In the summer of 2019, it negotiated a settlement with Bank of America, after the bank claimed Alex and Ani had defaulted on a $100 million credit line. The settlement called for Rafaelian to turn her holdings in the company to Lion Capital. Rafaelian eventually left the company, which is now reportedly headed by former Signet Jewelers chief financial officer Robert Trabucco.
According to the complaint, as part of the restructuring, Rafaelian agreed to loan Alex and Ani $7 million, with $5 million of that amount being paid as a loan from Lion to her, repayable within nine months.
Rafaelian’s response claims that, as part of that deal, Alex and Ani promised her $2 million in funding over two years to set up a new venture. That money hasn’t been paid, she said, as the company now contends the funds aren’t available. Rafaelian is currently suing Lion in Rhode Island federal court over those funds.
Rafaelian’s Rhode Island filing said that she “would never have agreed to her $7 million investment in the company, which included her agreement to the Note in favor of Lion Capital, if she knew the Company did not have the resources” to fund her new venture.
Lion Capital has filed a motion to dismiss Rafaelian’s claim. In a reply filed Nov. 6, which cited the New York State judgment, Lion charged that Rafaelian and co-plaintiffs Alex and Ani Pledge Co. and Venice Walk are “hoping to delay the inevitable consequences of their default on the [$5 million] note.”
The news first appeared in the Providence Journal.
(Image: Getty)Follow JCK on Instagram: @jckmagazine
Follow JCK on Twitter: @jckmagazine
Follow JCK on Facebook: @jckmagazine