Rock & Republic Bankruptcy Enters Next Chapter
Major developments have unfolded in the Rock & Republic bankruptcy case.
U.S. Bankruptcy Judge Arthur Gonzalez on Wednesday ruled that Richard Koral will remain the exclusive distributor for Rock & Republic’s off-priced goods with an amended agreement that now extends to Dec. 31 instead of Aug. 31. As part of the new agreement, Koral can not only distribute off-price and irregular goods to stores such as Nordstrom Rack, Saks Off Fifth and Loehmann’s but to websites such as www.gilt.com, www.ruelala.com, www.hautelook.com and www.bluefly.com. If, for any reason, Rock & Republic decides to terminate the agreement, Koral will receive $200,000 a month until the end of the year.
In addition, the bankruptcy case will remain in New York and won’t be transferred to Los Angeles, according to court documents.
Rock & Republic, which filed for Chapter 11 bankruptcy on April 1, had requested to change its exclusive distribution agreement with Koral after claiming in court that Koral was not accepting as much as $6 million in Rock & Republic’s off-price merchandise that needed to be sold to discount stores.
In addition, Koral had requested that the case, filed in U.S. Bankruptcy Court in New York, be moved to Los Angeles, where Rock & Republic and Koral are headquartered. Koral withdrew his change-of-venue request.
Richard Koral and his RKF LLC are the biggest secured creditors in the Rock & Republic bankruptcy. More than two years ago, Koral loaned Rock & Republic $15 million, with the premium-denim company putting up its trademark as collateral. The $15 million was due on April 2. Rock & Republic filed bankruptcy the day before.
Rock & Republic was founded in 2002 by Michael Ball, the current chief executive. The company’s jeans, which were a hot commodity and have appeared on the catwalks at New York Fashion Week and Los Angeles Fashion Week, have been sold in stores such as Nordstrom, Neiman Marcus and Bloomingdale’s.
Court documents show that Rock & Republic’s revenues were $97 million in 2009 with $3 million in profit.
In court papers, the company listed assets valued at $50 million to $100 million and liabilities of up to $50 million.—Deborah Belgum
