After missing an October interest payment on $270 million in unsecured notes, America’s largest bridal-chain is making preparations to file bankruptcy if they can’t reach an out-of-court deal with creditors, according to Bloomberg, citing people with knowledge of the matter. 

At issue is an overall debt load of around $760 million which carries a pre-negotiated restructuring plan. The wedding-gown merchant has less than two weeks before their next interest payment is due on Nov. 14.

As we reported last month, the missed payment following failed negotiations with three creditors set into motion a 30-day grace period with debtholders before the company is in default. Active discussions are said to still be underway and the situation “remains fluid,” according to Bloomberg‘s sources. 

David’s and three creditor groups have gone back and forth with out-of-court restructuring proposals for weeks. Early discussions contemplated a rights offering backed by existing noteholders including Solace Capital Partners and Oaktree Capital Group, a majority bond and loan holder, the people said. Those talks broke down after the financing from the funds did not materialize and creditors failed to agree on the pricing and terms of the proposed new debt structure, the people said. –Bloomberg

“We are engaged in discussions with our lenders in order to reach a mutually agreed-upon resolution designed to strengthen our balance sheet so we can increase our financial flexibility and further invest in our business,” a David’s rep told Bloomberg over email. 

David’s has no plans for major store closures or liquidations, “and the business would keep operating regardless of a court filing.” 

The bridal-chain missed an October 15 payment on its 7.75% unsecured notes which are due in 2020 at the request of creditors in order to allow negotiations over restructuring the company’s debt could continue. The talks reportedly include the company and advisers for both loan and bondholders. 

Print Friendly, PDF & Email

Related Posts