Alfred Angelo website
Alfred Angelo website ()

The Alfred Angelo chain of bridal stores made national news when it closed its 61 U.S. stores without notice, leaving brides-to-be panicking about their dresses.

The Delray Beach-based chain shocked consumers and bankruptcy attorneys alike with its decision to file for Chapter 7 bankruptcy liquidation on Friday. The move is a last resort — typically not the first outward sign of trouble, even in an age of frequent retail bankruptcies, attorneys said.

“This is the first I’ve seen it done like this,” Fort Lauderdale bankruptcy attorney Chad Van Horn said. “Usually, you see the going-out-of-business sales; you see where they’re going to close locations. You see it with Kmart, you see it with Sears, you see it with Sports Authority. You even are starting to see it with Macy’s. Usually long before a bankruptcy is filed, they’re looking to reorganize internally and close stores.”

But there simply were no other options for Alfred Angelo, said the company’s Miami attorney, Patricia Ann Redmond of Stearns Weaver Miller Weissler Alhadeff & Sitterson.

The company sought loans from several debtor-in-possession lenders, but all declined. By the beginning of July, Alfred Angelo’s credit card processor cut off service because the chain could not provide additional cash reserves, Redmond said. The company soon stopped taking orders.

Cash was so low that the company could not have paid rent if it filed a Chapter 11 liquidation, which aims to keep stores open and management in place for the short term, Redmond said.

“They looked every single way to try to do this,” she said. “They knew that liquidation was inevitable, but they looked for all different ways to try to make that happen, something more of a soft landing than a Chapter 7.”

The company’s board of directors met Monday by phone and agreed to liquidate the company, according to the Chapter 7 filing. Because Alfred Angelo has not yet filed all its paperwork in U.S. Bankruptcy Court in West Palm Beach, information about the company’s assets and liabilities is not yet in the public record. The court set deadlines next week for those filings.

But what the public has seen is a flurry of news stories about anxious couples preparing for their weddings. Alfred Angelo offered bridal gowns, tuxedo rentals, bridesmaids’ dresses and other clothing for bridal party members.

Brides-to-be across the country told BuzzFeed and other news outlets they were blindsided by the store closings. Many of them showed up at their shops to check on promised alterations and found apologies posted on the door along with an email address for Redmond, who said she has received more than 7,000 messages.

Blindsided Brides

Redmond said that before the stores closed on Thursday, employees were instructed to box up all the dresses that belonged to customers and send them out so that all that would be left in stores were samples. But not all the stores complied.

It’s still unclear how many stores have property that belongs to customers, Redmond said, but she is working with trustee Margaret Smith of West Palm Beach to get access to the stores and send dresses to brides who have contacted them. Alfred Angelo’s human resources director was retained to help with those efforts.

Some dresses are with seamstresses, and so the attorneys are working to get those returned to customers in whatever stage of alterations they are in.

A third set of dresses — worth about $1.2 million at retail price — are in transit from China, Redmond said. This week, she’ll get a list of what’s in transit so she can match the dresses with those who paid for them.

Smith and her attorneys, Brett Marks and Eyal Berger of Akerman in Fort Lauderdale, have been working feverishly since Friday on the seven bankruptcy filings, which include Australian, Canadian and Chinese arms of the company.

“We’re speaking with our lenders and others and evaluating potential sale opportunities to third parties,” Marks said. “But it’s a difficult job because when we inherited the case, the business entities had limited cash in the bank. So right now, we have limited maneuvering room. We’re trying to cut as many deals as we can.”

Because all the employees were let go and cash is tight, Alfred Angelo is past the point of a close-of-business sale, he added. But the attorneys are trying their best to serve the estimated 4,000 to 5,000 customers whose property is being held by the stores.

“We’re speaking with competitors, basically anybody that would have an interest in funding part of the inventory and helping us get as many bridal dresses and bridesmaids’ dresses to affected parties as possible,” Marks said.

Other retailers in the segment are offering discounts to Alfred Angelo customers caught off guard by the store closures. David’s Bridal said in a Facebook post that it would provide special pricing to anyone with an Alfred Angelo receipt.

Some attorneys are also offering help. Van Horn, managing partner of the Van Horn Law Group, is thinking of putting out a sample of an emergency motion to compel that brides could file in bankruptcy court to try to recover what they’re owed.

“It’s not right,” he said. “I’m interested to see why this happened this way, because it does not seem like the normal course.”

The Alfred Angelo website, which will be updated with more information about the bankruptcy, provides an address for those affected to reach the trustee. A meeting of creditors is set for Aug. 28 in West Palm Beach.

GrayRobinson shareholder Robert Schatzman said the lesson for other retailers to take away from the Alfred Angelo debacle is “plan ahead.”

“Recognize the reality early enough so that you’re able to deal with the contingencies when they arise,” the Miami bankruptcy attorney said. “Failure to recognize the reality early enough is usually what leads to a failure in the process, either in reorganization or liquidation, and it diminishes the return to the creditors.”

He said these issues will come up more and more as retailers continue to face tough financial decisions.

“Right now, retail is a very unstable industry,” he said. “Because of the obligations and the expense of running the brick-and-mortar stores and competition with online retail shopping opportunities, there’s going to be a great deal more retail failures.”