David's Bridal avoids shutdown with no-cash bankruptcy sale

CION Investment

14/07/2023 17:12

By Dietrich Knauth
       NEW YORK, July 14 (Reuters) - Bankrupt wedding gown
retailer David's Bridal received court approval on Friday to
sell its business to asset manager Cion Investment Corp in a
no-cash transaction, reaching a deal to keep 195 stores open and
avoid a total shutdown.
    U.S. Bankruptcy Judge Christine Gravelle approved the sale
at a court hearing in Trenton, New Jersey, saying that the
company's employees, landlords and creditors would be better off
under new ownership than they would in a full liquidation. 
    "It's essentially this or nothing," Gravelle said. 
    David's Bridal said that its primary goal in bankruptcy was
to find a buyer that could preserve its business. The company
signed non-disclosure agreements with 62 potential buyers but
only received two offers besides the Cion bid, according to
testimony from David's Bridal's financial adviser, Surbhi Gupta.
    Cion, in addition to keeping stores open, agreed to pay
certain of David's Bridal's debts, costs related to renewing or
breaking leases at retail locations, and professional fees
incurred during the company's bankruptcy, according to court
documents. 
    The other bidders offered to buy David's Bridal's brand name
and intellectual property without acquiring its stores or
inventory, and neither offered more than $250,000 in cash, Gupta
testified.
    "Candidly, I don't know if there are other viable options,"
Gupta said in court. "I'm not even sure we have the funds to
finance a liquidation of the business."
    The Cion sale would allow David's Bridal to continue as a
scaled-down business, preserving about two-third of the
company's stores and allowing 7,000 of the company's 10,000
employees to keep their jobs, Gupta said. The bankruptcy sale
also reduced the company's overall debt to about $50 million
from its previous level of $256.9 million. 
    David's Bridal filed for bankruptcy in April, saying its
business has suffered in recent years due to the COVID-19
pandemic, decreased demand for wedding dresses and high
inflation. The company previously went bankrupt in 2018.
    About 25% of brides in the U.S. wear David’s Bridal gowns at
their weddings, and David's Bridal has dressed 70 million brides
over its 70-year history, according to the company's court
filings.

 (Reporting by Dietrich Knauth
Editing by Mark Potter)
 ((Dietrich.Knauth@thomsonreuters.com;))