On April 4, Art Fashion Corp., the North American arm of the brand of designer Roberto Cavalli, filed for Chapter 7 in New York Southern District court.
The company’s eight stores, located in upscale areas like Madison Avenue in New York City and Beverly Hills, Calif., and four outlets closed last month, said a report in The New York Times.
According to Art Fashion’s bankruptcy papers, parent company Roberto Cavalli S.p.A. is experiencing “severe financial distress.”
“[Cavalli’s] stockholders have engaged in a months-long process to obtain additional capital to support the global operations of Roberto Cavalli SpA and its affiliates, including its business in the United States operated through the company,” said the filing. However, “it has been unsuccessful at obtaining capital sufficient to support continued operations in the United States.”
When the parent company terminated marketing contributions to its U.S. subsidiary, that strained its liquidity and left it unable to continue as a going concern, the filing said.
According to Business of Fashion, Art Fashion Corp. has operated at a loss for the last five years, including a $17.8 million loss in 2018, excluding $13 million spent in marketing.
Business of Fashion also reported that executives of the U.S. subsidiary, including CEO Salvatore Tramuto, have resigned.
In 2015, private equity firm Clessidra bought a 90 percent stake in Cavalli, together with minority coinvestors private equity firm L-GAM and Chow Tai Fook Enterprises. Earlier this year, reports started popping up that Clessidra was trying to sell the brand, with German fashion designer Philipp Plein and investment firm Bluestar Alliance listed as possible suitors.
Prior to that, the designer brand was owned by the Italian watch and jewelry conglomerate Morellato & Sector. The Cavalli brand was founded by its namesake designer in 1972, when he opened his first boutique in St. Tropez, France. The designer retired from the company in 2015.
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