Rubie’s Costume Company, Inc.

Client Profile

Headquartered in Long Island, NY, Rubie’s Costume Company, Inc. and its U.S. based subsidiaries and affiliates (collectively “Rubie’s”) is a family-owned and operated designer, manufacturer and distributor of costumes and related accessories with a wide-ranging portfolio of licensed products including 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 operational restructuring programs to bring operating expenses in line with revenue expectations 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 April 2020, in need of immediate funding to begin its 2020 Halloween inventory build, Rubie’s determined that filing for protection under Chapter 11 of the U.S. Bankruptcy Code would provide access to restricted cash on its balance sheet and allow it to secure the funding necessary to continue to operate in the ordinary course.

Solution

SSG was initially retained by Rubie’s in April 2020 to refinance its credit facility and secure additional funding for seasonal working capital purposes. SSG conducted a comprehensive post-petition process to secure $45 million in DIP financing as a bridge to an exit from bankruptcy.  Once the DIP financing was secured, SSG immediately began the process of soliciting interest from potential strategic and financial partners who could provide the capital and operational expertise needed to complete the turnaround and fund an exit from bankruptcy by the end of Q3 2020.  Following an expedited marketing process and receipt of multiple letters of intent, RUBIES II, LLC, a newly formed entity led by collectibles industry veteran Joel Weinshanker and a private investment firm, was selected as the Stalking Horse bidder.  After SSG’s remarketing process attracted significant interest from several potential competing bidders, the Stalking Horse bid was deemed the highest and best offer for Rubie’s assets and provided the highest likelihood of closing within the aggressive timeline.  The sale transaction, with a value of approximately $140 million, saved thousands of jobs during a time of unprecedented macroeconomic uncertainty and resulted in the repayment of all pre and post-petition secured obligations, the assumption of all post-petition accounts payable, payment of all administrative and priority claims and a substantial recovery to the unsecured creditors.