- David’s Bridal has secured court approval to pay up to $8.9 million owed to its trade creditors after filing for Chapter 11 this week.
- The company owes about $27.5 million in all on its accounts to trade creditors, including critical vendors.
- That includes $5.5 million owed to Fillberg Limited, a venture co-owned by the retailer that sources most of its merchandise.
For any retailer in bankruptcy — whether they intend to reorganize, sell themselves or even wind down in orderly fashion — keeping operations running smoothly through the process is critical. For bridal retailers, maintaining their supply chains in bankruptcy is arguably even more crucial.
Take the case of Alfred Angelo, a wedding retailer that shut down abruptly nearly six years ago. Customers that had already put down deposits were left panicked, wondering if they would get their dresses or their deposits back. Scores of customers turned into bankruptcy claimants.
The company’s liquidation haunted David’s Bridal amid its first filing for bankruptcy in late 2018. James Marcum, current CEO of David’s Bridal, noted in a filing this week that the previous bankruptcy came during what’s known in the industry as “Bridal Christmas.” This is when customers pick their dresses and pay their deposits for dresses that may be on hand or in a distribution center, or may still need to be manufactured or are in transit.
“Unfortunately, the timing of the Prior Chapter 11 Cases during the 2019 Bridal Christmas season impacted the customer’s perception of the Company’s brand and resulted in a decline in confidence in the Company during what should have been a peak sale period,” Marcum said. According to the executive, that helped set the stage for David’s Bridal’s second bankruptcy.
Today the company is heavily reliant on the Fillberg joint venture, which is the exclusive purchasing agent for David’s Bridal outside of North America, to source its merchandise. That makes the Hong Kong-based Fillberg key to the retailer’s health in the coming weeks and months.
Fillberg sources more than 87% of David’s Bridal’s merchandise and acts as a conduit between the retailer and some 30 fabric mills and factories in China, Sri Lanka and other areas. Last year, the entity supplied around $120 million in merchandise for David’s Bridal, according to a filing.
Fillberg sells the goods to the retailer without markup, taking instead a commission payment from the company. And David’s Bridal currently owes the entity several million dollars, which the retailer said Fillberg needs to pay its own suppliers. David’s Bridal needs those suppliers to keep merchandise flowing to its customers.
“Implicit in the Debtors’ businesses is their reliance on services provided by the Critical Vendors,” the company said in its request to pay suppliers. It went on to note that it had narrowed down a list of 600 total vendors to a smaller group that represent 26% of its accounts payable as of its Chapter 11 filing, and who the retailer needs to pay $6.9 million in the coming days to keep its business running smoothly.
To pay those vendors and other bills, David’s Bridal secured court approval this week for a bankruptcy financing package with an $85 million credit facility.
While in bankruptcy, the retailer is looking to sell itself during the process, Marcum said. If no acquirer emerges, David’s Bridal plans to liquidate.