Rubie’s Costume Company, Inc.

Client Profile

Headquartered in New York, NY, Rubie’s Costume Company, Inc. (“Rubie’s” or the “Company”) is a family-owned and operated designer, manufacturer and distributor of costumes and related accessories with a wide-ranging portfolio of licensed products including, but not limited to: Marvel, Warner Brothers, Nickelodeon, Disney and Lucasfilm costumes, memorabilia, novelties and toys. As the world’s largest costume provider, the Rubie’s brand has been synonymous with holiday outfits and accessories for nearly 70 years.

Situation

Rubie’s endured challenges through 2018 and 2019 primarily due to the continued shift in consumer preferences toward e-commerce. In 2019, Rubie’s implemented comprehensive cost-cutting programs in order to bring operating expenses in line with revenue in addition to implementing a new go-to-market strategy with an enhanced focus on online retail. While these initiatives resulted in a significant improvement in profitability, the onset of COVID-19 impacted Rubie’s ability to obtain adequate financing to support its seasonal working capital needs. In order to access the capital needed to fund inventory production and retain the value of its assets, Rubie’s filed for protection under Chapter 11 of the U.S. Bankruptcy Code in April 2020.

Solution

SSG was retained by Rubie’s in the middle of April 2020 to refinance the Company’s credit facility and secure additional capital in order to better capitalize its balance sheet. While several lenders expressed an interest in the opportunity, the uncertainty of COVID-19 forced most lenders to temporarily abstain from extending new loans. In need of immediate funding to begin its 2020 inventory build, Rubie’s determined that filing for protection under Chapter 11 would enable access to restricted cash on its balance sheet and allow the Company to secure the funding necessary to continue to operate in the ordinary course. SSG conducted a comprehensive marketing process to secure debtor-in-possession (“DIP”) financing as a bridge to an exit from bankruptcy. While several parties submitted term sheets, the term sheet from JMB Capital was determined to be the best offer. The DIP facility provided $45 million of additional funding.