Bridal Dressmaker JLM Couture Files for Bankruptcy Court Reorganization
Bridal dressmaker JLM Couture Inc. has filed for bankruptcy in Delaware — hit hard by the disputes with a landlord and a former designer as well as by the pandemic.
Already the company — which makes bridal-related dresses under the Allison Webb, Lazaro, and Hayley Paige brands, among others — had cut back its operations significantly, shifting down from a workforce of 70 in 2020 to 21 employees today.
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JLM said in a statement: “Given that JLM Couture has no significant bank debt and is actively working out a restructuring plan with its trade vendors and professional creditors, JLM Couture remains committed to delivering top-tier designs to its clientele and is hopeful that this restructuring will fortify its position and enable the company to return to a position of strength in the wedding gown industry.”
Joseph L. Murphy founded JLM in 1988 and became chief executive officer and controlling shareholder in the mid-’90s, according to a declaration that was part of the Chapter 11 filings.
Murphy said that the company was on the “verge of insolvency” when he took the reins, but that he was able to raise new equity and set up new lines of credit and expand the business.
“One novel approach that I as CEO and my team undertook was to establish individual designers under one umbrella sharing operational and fixed costs while differentiating the designers as unique talents and personalities in the marketplace,” Murphy said. “This included building design support staff, sales and marketing departments, and negotiating for prominent exposure in wedding gown magazines and other media for relevant JLM Couture designers.”
In 2012, JLM expanded the luxury portion of the business, adding the Hayley Paige line as well as a West Hollywood flagship.
But the pandemic weighed heavily on the bridal business generally as well as on JLM and by 2021 the relationship with the brand’s designer — Hayley Paige Gutman — had broken down into a nasty legal dispute over Gutman’s use of the Hayley Paige name professionally and access to an Instagram account.
While a court largely sided with JLM and Gutman ultimately changed her name to Cheval, the battle weighed on the company.
“The debtor’s operations were primarily affected by the active and contentious litigation with one of its former designers,” Murphy said. “The breach of contract by this designer has substantially hurt the company’s sales, and the legacy costs associated with the designer’s operation could not be reduced quickly enough to offset this damage.
“While the debtor has been successful at each step of such litigation, it has still taken a toll on the debtor financially and caused the debtor’s principals to have spent significant time and effort focusing on issues outside of the operation of the debtor’s business,” he said.
Murphy also said the company’s landlord claimed it was owed $840,072, but that the company disputed that amount.
A company spokesperson said given these challenges, a restructuring was “the most strategic move to protect our valued operations and assets.”
It all proved to be too much and led the company to file for bankruptcy protection from its creditors.
In the midst of the pandemic, JLM logged annual sales of $10 million for 2021, according to its tax returns. As of the end of August, it had unaudited total assets of $2.9 million, including cash on hand of $130,000, and total unaudited liabilities of $2.1 million, including accounts payable of $1.3 million and long-term debt of $139,000.
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