NEW YORK — In a surprising development, The Gillian Group, one of the industry’s most well-known and established dress and suit firms, is having financial difficulties and may not be able to survive, sources reported Monday.
They said the 23-year-old company — owned by Jon Levy, its president, and Kay Unger, its design director — has struggled through a tough year and is “having cash-flow problems.”
Neither Levy nor Unger could be reached for comment.
Several sources said Gillian has missed payments to “several accounts.” Leonard Milberg, chairman of Milberg Factors, Gillian’s factor, said Monday it was “inappropriate for me to comment on a client.”
Sources said Gillian is trying a last-ditch effort to renegotiate a bank credit facility. With much more secured debt than assets, the company, sources said, if it were forced to go into bankruptcy court, would file a liquidating petition rather than attempt a Chapter 11 reorganization.
Some Seventh Avenue firms reported last week that they had received resumes from Gillian employees looking for job opportunities. The firms said Gillian employees all believed the company was about to shut its doors.
One source familiar with the company said it “didn’t have a dime in cash, had no receivables and wasn’t having much luck getting a bank to loan it some money.”
“As far as I know, they planned to shut down shop and lay everybody off,” said the source, adding that it would be difficult for the company to last until the first of the year.
However, one source said talk of a Chapter 7 filing may be premature.
“They still have some viable assets that could be restructured or sold for the benefit of creditors and they should at least try that before filing a Chapter 7,” the source said. “I also heard that they have some good bookings for January and the key thing for them is to get into January. Once they start shipping those sales, that will free up some cash. I see them cutting overhead, letting some people go.”
Sources said several factors have contributed to Gillian’s troubles. They include the generally poor performance of apparel this year, increased competition from sportswear firms that have opened extensive dress collections, such as Jones Apparel Group, and from cheaper dress lines, tighter credit restrictions from banks and factors, retail consolidations.
The company, known for its printed silks, reportedly peaked at a volume of more than $100 million a few years ago, but had fallen off to about $80 million this year.