The Connaught Group, a direct seller of couture-level apparel, will be sold at a bankruptcy court auction later this month.
The firm, founded in 1982 by William Rondina, who is also chief executive officer and creative designer, filed for Chapter 11 bankruptcy court protection on Feb. 9 in Manhattan. Connaught sells three distinct collections: Carlisle, Per Se and Etcetera. Each line is sold four times a year via 1,300 independent sales consultants through trunk shows.
According to court papers, the firm at its height hit $150 million in volume in 2007, but that had fallen to $108 million in 2010. The decline was due to the global economic crisis, the firm said. In addition, Connaught has posted operating losses since 2008.
It currently owes $12.4 million to secured creditors J.P. Morgan Chase and Citibank. The total owed to unsecured creditors is estimated at between $50 million and $100 million, according to the Chapter 11 petition filed with the court. Included among the unsecured creditors is Rondina, at $31.4 million, who had guaranteed certain real property for loans to the company and to ensure that the secured lenders would continue to lend, court papers said. The petition also said the company’s assets are valued at between $10 million and $50 million.
The firm’s primary assets are its inventory and intellectual property.
Consensus Advisors is Connaught’s financial adviser and is working on lining up buyers for the firm. Credit sources said the auction is set for March 24.
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