PROVIDENCE — Alex and Ani, the Rhode Island-based jewelry company that grew into a billion-dollar business, filed for Chapter 11 bankruptcy protection in Delaware on Wednesday.
The company, founded by Carolyn Rafaelian, listed between $100 million and $500 million each in assets and liabilities, according to the filing.
Its largest unsecured debts are with property management companies, including Chapel Associates in Johnston, which is owed $4.1 million. It also owes the town of East Greenwich nearly $176,000 in taxes, the filing states.
Chapter 11 bankruptcy is meant to restructure debts, and is usually for businesses.
In a statement Thursday morning, Robert Trabucco, Alex and Ani’s chief restructuring officer, said the company intends to continue operating its current open stores and its website “as usual” throughout the court-supervised process.
Trabucco also said that the COVID-19 pandemic forced the company to pause any strategic growth initiatives, temporarily close stores, and scale back its operations because of the reduced customer demand in their brick-and-mortar locations.
“We have worked diligently to overcome challenges with our capital structure, and we are very pleased with our progress from an operational efficiency standpoint,” said Trabucco.
Alex and Ani was founded in 2004 in Cranston, Rhode Island, in the former Cinerama Jewelry factory, which had been owned by Rafaelian’s father. (The factory is now home to Air & Anchor, a jewelry company founded by Rafaelian’s niece, Rachel Ajaj and Ajaj’s husband, Omar Ajaj, in 2020.) Alex and Ani became wildly popular for its charm bangle bracelets. The company ran Super Bowl ads two years in a row.
But the company’s financial troubles started well before the pandemic.
In the summer of 2019, the company had filed a gender discrimination suit against one of the company’s lenders, Bank of America, seeking $1.1 billion in damages after it had cut off the company’s revolving line of credit in December 2018. The company claimed in the suit that the bank had “treated it differently” because it was led by a woman. The suit alleged that sales declined around $80 million and the company could not pay vendors.
The suit was dropped less than a month later.
In November 2020, Rafaelian was forced to pay $5 million to the London-based investment firm Lion Capital, which now owns the majority of Alex and Ani. Lion Capital had filed a legal action against Rafaelian last June and claimed that she did not repay the $5 million she had borrowed from the firm with interest by the maturity date on June 15. She had initially borrowed the money in September 2019 to “restructure the company.”
Rafaelian, who named the company after her two eldest daughters, was forced to give up one third of her own stake in the jeweler in the last few years.
Her personal net worth has also plummeted from $1 billion to an estimated $100 million. She was an entrepreneur who landed on the cover of Forbes’ Richest Self-Made Women back in June 2017. At the time, the company’s revenue was close to $500 million. By 2019, it had dropped to $400 million.
In an October 2020 video that she posted on Instagram, she announced from her mansion in Newport, R.I., that she was no longer designing for the company that she had founded.
Rafaelian said in the video that she had started a new company called Metal Alchemist, where she planned on “continuing all the love and the efforts and designs that support things that are truly important to me.” But the company’s website offers little details.
Trabucco said Thursday that there will be “little to no” disruption in day-to-day business and operations as a result of the Chapter 11 filing.
“Our employees will continue to be paid as usual during this process. The Company will look to optimize its retail footprint, bolster the eCommerce platform, and focus on strategic wholesale accounts,” he said. “This process and proposed transaction is positive news for our employees, our customers, and our suppliers... By utilizing the Chapter 11 process, we are able to ensure an expedited and orderly right-sizing of our balance sheet and operations.”