bankruptcy | Apr 1, 2020 |
Donghia files for Chapter 7 bankruptcy
Boh staff
By Staff

Following the news that Donghia was closing its showrooms and laying off the majority of its staff, the company has filed for Chapter 7 bankruptcy. According to documents filed in Connecticut District Court on Monday, the company estimates that it owes between $10 million and $50 million to more than 1,000 creditors, including design centers where it had operated showrooms and a who’s who of top designers. Some surprises? Fashion house Louis Vuitton, hospitality groups MGM Resorts and Soho House—even The Church of Jesus Christ of Latter-day Saints.

At the time of filing, the company listed that its assets fell between $1 million and $10 million, which will go toward the liquidation of the company under Chapter 7 of Title 11 in the U.S. bankruptcy code.

The Donghia brand has long been an icon in the design world, the brainchild and namesake of legendary designer Angelo Donghia. Founded in 1968, the company—which grew to include furniture and textiles, as well as a mini empire of multiline showrooms—continued after his death in 1985. In 2005, Donghia was purchased by a consortium of companies led by Italian textile company Rubelli, which saw the brand as a clear path to showroom distribution throughout the United States.

Over time, the departure of many of the brands represented in the showroom took a toll on the bottom line. “The formula for Donghia’s success is to rep a lot of lines and pay for the showroom with that commission—then Donghia gets a free showroom,” one former employee explains. “But you have to take care of the people you represent for that model to work. How many lines that do $1 million a year can leave before it started to hurt? What killed them was losing that commission.”

In certain industry circles, it has been an open secret that the Donghia brand was for sale for more than a year. Several former employees who spoke on the condition of anonymity told BOH that they had been hopeful at the start of 2019 when a potential buyer expressed interest—but that, after taking a closer look at Donghia’s balance sheet, the would-be owner walked away from the deal in May or June that year. “We were on pins and needles waiting, thinking, ‘Please, somebody, buy this company,’” one says. “The people who worked for Donghia, they could’ve left a long time ago knowing the craziness that was going on, but they stayed because they were loyal. They loved this brand.”

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