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Ep. 1: What's a Bride to Do?  


Bankruptcy attorney, Melissa A. Youngman, discusses the recently filed chapter 7 bankruptcy case of Alfred Angelo: The Bride's Studio 3, a world-wide retailer of bridal gowns.


Hi there! My name is Melissa Youngman. I'm a bankruptcy attorney practicing in Orlando, Florida. Welcome to the first ever episode of Bankruptcy Bites. Bankruptcy Bites is my new blog and video blog dedicated to all things bankruptcy. It will be short updates on current cases, case law updates, and things like that. It's meant for bankruptcy practitioners and anybody who might be interested in just finding out what's going on in the bankruptcy and insolvency world this week.

So, I decided to start episode one this week with a case that's near and dear to my heart. It is the Chapter 7 filing of the Alfred Angelo bridal shop. The reason that's dear to my heart is because I just got married a year and a half ago. And I just can imagine what's going through the minds of all the customers who have pending wedding dress and wedding party dress orders. So, it was a Chapter 7. It was filed in the southern district of Florida, in the West Palm Beach division. Judge Hyman has been appointed and Margaret Smith is the trustee, Patricia Redmond is the debtor's counsel and so far the case has been pending for just a couple of days. It was filed last Friday, it's a Chapter 7. We're not real sure what's going to happen in the case at this point because the only filing so far are the petition and schedules, and the notice of creditors.

So, in most Chapter 7 cases it's generally a liquidation proceeding. And here, it looks like the stores have been closed based on news reports. But that doesn't necessarily mean the stores are going to stay closed. I represented a trustee in a case up in New York about 10 years ago where a company filed Chapter 7 and the trustee decided that it made the most sense to try to resume operations of the business and then sell the business as a going concern. So I'm not sure what the trustee is going to do in this case. But it's certainly a possibility that she could file a motion seeking approval to operate the business for a limited amount of time just to try to preserve that going-concern value. And then she could try to sell the business as an operating business to a third-party in order to maximize a potential return to creditors. But we don't know. There's really no way of knowing. That might be completely unfeasible. But I'm just guessing different things that could happen in this case.

So if you know anybody who might be in the situation where they placed an order at the store for a dress and it hasn't been delivered yet, the first thing I would tell that person is not to panic because we don't know what is going to happen. The stores could reopen, but maybe not. I do know that at least one newspaper reported that the Debtor's Counsel said that there is a plan in place to get bridal dresses delivered to customers who ordered them. We might know more at the 341 meeting, which is currently scheduled for August 27th, 2017 at 1 o'clock PM. So if you have a friend or a family member or anybody like that who is in this situation, it certainly makes sense for them to try to contact a bankruptcy attorney in Florida to see, one, if maybe they can reach out to the Debtor's Counsel to find out what exactly is happening for those unfulfilled orders, and, two, maybe they can attend that initial meeting of creditors with the trustee to get a little bit more information as well.

Another thing to note is at the very least those brides and those bridal parties might have a claim against the estate if they're owed money. For instance, if they never put a deposit down and they never get the dress that they ordered, then they can at least have a claim to try to get that deposit back. But I have a query for all you bankruptcy attorneys out there. If a bride or a bridal party member orders a dress from the shop-- when I did that a year and a half ago, now it wasn't at this store, it was at a different retailer, I got a written agreement. I put a deposit down and I believe I had to do two more payments after that before the dress was delivered. I think that's probably pretty standard. So, if that's the case, when Alfred Angelo filed bankruptcy, all those brides out there who had put down their initial deposit but they didn't pay the rest of it, and the dress hasn't been delivered, does that qualify as an executory contract which the trustee can assume or reject within 60 days of the filing of the case? I think that it might.

And what does that mean for those customers out there? If a customer has an executory contract, and the trustee does nothing within the 60 days after the filing, then those contracts are deemed rejected, and presumably, the customers would then be entitled to rejection damages, but I'm not sure what those rejection damages would be. I'm wondering if it could be the cost of replacing the dress. I do know that if you have to buy a bridal gown in a hurry, there are increased costs involved there because the store has to expedite delivery from the designer to get that dress in the shop in time to alter it before the bride ultimately needs it for her wedding. And I do know that there's a mark-up for that. So if the bride never gets her dress from Alfred Angelo as a result of this bankruptcy case, the trustee rejects the executory contract. What does that mean? Will the bride be able to recover the replacement cost in addition to whatever money she actually paid to Alfred Angelo?

We all know in Chapter 7 cases that it's very unlikely that an unsecured creditor is going to get paid very much if anything on their claim. But here, you have a huge retailer with stores all across the country and also worldwide, so there is likely going to be assets here. I don't know how big the debt the secured creditor block is going to be, I don't know what priority claims are out there, but it is worth it, I think, if you know a bride or other customers out there in this situation to at least speak to a bankruptcy attorney in Florida because they can probably reach out to the Debtor's Council or attend the 341 meeting and find out for sure what's going on with those dress orders and whether or not they're going to be delivered. And if they're not, then what are the next steps? I think certainly got to file a proof of claim.

The next question is, did this qualify as an executory contract, and if so, what does that mean in terms of damages? Typically, rejection damages are going to be limited to pecuniary loss, but what is that pecuniary loss? I think it's really going to depend on what the state law says when a wedding dress order isn't fulfilled. What qualifies there? So it's an interesting case. I hope it works out well for everybody, but we shall see. Only time will tell. If you have any questions, feel free to contact me. That's a picture of me, that's my contact information, there's my email address, and go check out the new blog: Thanks a lot for listening. Bye-bye.

UPDATE (7.19.2017) 

Alfred Angelo and its affiliates filed 19 separate chapter 7 cases on 7.14.17.  In an effort to streamline the administration of the cases, on 7.19.17, the chapter 7 trustee filed a motion seeking to jointly administer all nineteen cases through one main case. If granted, the main case, under which all affiliate cases will be administered, will be In re AA Florida Bridal Retail Company, LLC, et al.; Case No. 17-18864-PGH.