David’s Bridal made good on its intent to file a pre-packaged Chapter 11 petition for bankruptcy court protection, and at the same time sought to assure brides that they will receive dress orders on time.
The company said the “vast majority” of its term loan lenders and “substantially” all of its senior noteholders and equity holders support the restructuring agreement in place. The agreement, which reduces the company’s debt by more than $400 million, serves as the basis of the company’s reorganization and restructuring plan. David’s Bridal said it filed its Chapter 11 petition in a bankruptcy court in Delaware, and that the court-supervised process is expected to be completed “by early January.”
Scott Key, chief financial officer, said of the pre-packaged filing, “We will be able to move through the court process very quickly, and in the end, we will be able to allocate even more of our resources toward making strategic investments in digital technologies and talent that will drive long-term growth and operational excellence at David’s Bridal.”
Tim Hynes, analyst at Debtwire, estimated annual volume for fiscal 2017 at $744 million, down from an estimated $757 million for fiscal year 2016. As of June, the company had debt around $750 million, and it elected to skip a $10 million interest payment in October for notes due 2020, according to Hynes’ estimates. While sales likely continued to slip, the analyst said that if the company can “right size the debt, it still has a viable business.”
David’s Bridal said it has been able to secure commitments for $60 million in new debtor-in-possession financing from its current term loan lenders, as well as a recommitment of its existing $125 million asset-based-loan. It also said it does not anticipate any issues with its long-standing vendor and manufacturing partner relationships.
David’s Bridal emphasized that it has sufficient liquidity to meet its business obligations, and that customers can continue to shop across the more than 300 David’s Bridal stores and online without disruption. The company states, “Orders will arrive on time and bridal appointments will not be impacted.”
Key said the filing is “just the next step in our efforts to proactively secure David’s Bridal for a long, successful future.” He also said the company, for more than 60 years, has delivered high-quality dresses and accessories for customers’ special occasions and that the actions connected with the filing will allow the company to build on that tradition. “Our team is laser focused on providing brides and their families with the five-star service and experience they deserve and have come to expect from us,” Key said.