GILLIAN GROUP SHUTS DOWN OPERATIONS
Byline: Rich Wilner and Arthur Friedman
NEW YORK — The end came quickly and quietly for the Gillian Group.
The well-known dress firm, caught in a cash crunch for months and liquidating its assets to pay off secured creditors, has ceased operations.
It has sold practically everything to the bare walls except for its trade name — and that is on the block as well and could be sold shortly.
The 23-year-old company, a staple in bridge dress departments at retailers across the country for years, was hurt recently by apparel’s poor performance at retail, stepped-up competition and tighter credit restrictions. Its volume had peaked at more than $100 million a few years ago, but slipped to about $80 million in 1994.
After unsuccessfully scouting possible Chapter 11 reorganization routes last month, the company
Sold off all of its inventory, valued at more than $9.5 million, last Friday to Jelina International, a jobber here.
Is peddling its Gillian trade name in the market.
Has been hit with an involuntary Chapter 7 petition in bankruptcy court, here, by three creditors owed about $335,000.
Has shut its headquarters at 498 Seventh Ave.
After determining earlier this month that a reorganization was out of the question, Jon Levy, president, decided to sell off the company’s remaining assets, including its entire inventory of mostly recent items, according to sources.
One source said Levy was trying to keep the liquidation quiet by keeping it out of the courts.
“Levy wanted to liquidate Gillian’s assets himself in order to pay off the company’s secured creditors,” the source added.
The firm’s inventory was purchased last week by Jelina International Ltd., 530 Seventh Ave., a jobber active in the high-volume upper end of the industry.
Sam Abraham, president, said the sale was “interesting” because Gillian demanded the entire inventory lot be out of the New Jersey warehouse by last Friday and insisted that they be wired the funds immediately.
“In fact, it could have been a sticky situation because they got our money before we took control of the merchandise,” Abraham said in a telephone interview Tuesday. “It turned out fine, however, because everyone at Gillian handled themselves great.”
Abraham said he was currently in talks with Levy concerning the purchase of the Gillian name. He said he has not made a decision on whether he will make an offer, but that there might be a problem overall with the sale of the Gillian mark.
“Both Levy and the bank approached me separately concerning buying the mark,” Abraham noted. “I think they both might feel that they own it.”
Abraham declined to identify the bank and Levy did not return calls seeking comment.
In bankruptcy court, three Chinatown-area sewing companies filed a joint Chapter 7 petition seeking to force Gillian into liquidation. They are Refine Fashions Inc., 54 Canal St., which is owed $185,000; B.A.W. Fashions, 132 Mulberry St., owed $89,000, and New Standard Factory Inc., 224 Centre St., owed $61,000.
David Schreier, counsel to the three companies, said he represented a total of 13 creditors of Gillian that are owed more than $750,000. He declined to elaborate.
Gillian’s showroom at 489 Seventh Ave. was closed Tuesday, and building security personnel said it had been closed for several weeks.
Last week, however, the phones were being answered, although Levy did not return calls. On Tuesday, calls to the showroom went unanswered. Kay Unger, Levy’s partner and designer of the collection, did not return a call made to her at the firm’s design studio at 230 West 38th St.
Seventh Avenue executives said the fall of Gillian symbolizes the problems of operating in today’s environment.
“The old axiom that on Seventh Avenue a couple of bad seasons can kill you no matter how successful you’ve been in the past seems to apply to Gillian,” said one dress executive, who did not want to be identified.
“It looks like the classic Seventh Avenue squeeze play,” said another dress manufacturer. “The overhead got out of hand, the margins shrunk from making too many deals with the stores, the inventory was not controlled and there was an enormous drop in volume due to a slowdown in the social occasion category. When all that happens and you do nothing to react to it, you go out of business.”
Another dress maker, speaking on condition of anonymity, said it is possible to have one unprofitable year after 20-plus years making money and be forced to close down.
“Gillian was mostly a social occasion department resource, and when that category fell off the past couple of years, they really got hurt,” the manufacturer said. “Women started buying social occasion dresses with day-into-evening looks in daytime departments, and that’s not where Gillian was placed. They were also hurt by being a bridge resource at a time where stores are switching a lot of their money into better and moderate resources.”
“The demands of today’s market are so great from stores, from banks, from factors, that’s it’s a difficult environment to do business,” said another dress executive, who requested anonymity. “You have to analyze every aspect of your business every day, even if you’ve been in business for 50 years.”
Ironically, several sources said despite the financial difficulties, the company had strong orders for spring, but just couldn’t get itself out of its bad cash-flow position.