On Nov. 19, David’s Bridal, the 311-store wedding dress retailer that also sells jewelry, filed for Chapter 11 in a prepackaged bankruptcy in Delaware court.
The company hopes to exit Chapter 11 by mid-January.
Its restructuring plan, which has the support of the majority of lenders and equity holders, will reduce its debt by some $400 million, it said.
In a first-day declaration, executive vice president and chief financial and operating officer Joan Hilson asserted the retailer had to take this action because of “the amount of debt on [its] balance sheet, most of which will mature within the next 12 months.”
On Oct. 15, it had to postpone a $10 million interest payment by 30 days, increasing the pressure on the company.
Hilson said that otherwise, its business is healthy.
“Despite the significant headwinds facing the brick-and-mortar retail industry, over the past several years, the debtors have experienced steady financial performance and only modest loss of market share,” she said. “The vast majority of David’s Bridal stores generate positive EBITDA, and the debtors have historically generated stable operating cash flows.”
As part of the prepackaged bankruptcy, term lenders have committed to $60 million in new debtor-in-possession financing and to continue a $125 million revolving-credit facility.
A company statement repeatedly stressed that it expects to stay in business and will still service its customers—a possible nod to what happened when rival 61-store wedding retailer Alfred Angelo filed for Chapter 7 last July, leaving brides stranded.
Founded in 1950, David’s Bridal has had four owners in the last 18 years.
After going public in 1999, it was purchased by the May Department Stores Co. one year later. In 2005, May was itself purchased by Federated Department Stores. In 2007, Federated sold David’s to private equity firm Leonard Green & Partners. Five years later Leonard Green sold it to another private equity fund, Clayton Dubilier & Rice.
In January, senior editor Emili Vesilind reported on five major retailers that could go bankrupt this year: David’s Bridal, Bon-Ton, Sears, and Neiman Marcus. All have filed this year except for Neiman.
David’s Bridal’s bankruptcy papers can be seen here.
(Image via: Wikipedia)