Career and Jobs

Alex And Ani Founder Carolyn Rafaelian Ordered To Pay $5 Million To U.K. Investment Firm

Alex and Ani founder Carolyn Rafaelian must pay $5 million to London-based investment firm Lion Capital, which owns the majority of her jewelry company, a New York State judge has ruled.

Lion Capital filed a legal action against Rafaelian in June, claiming she did not repay $5 million she borrowed from the firm with interest on the maturity date of June 15. The dispute, and the loan, stem from a September 2019 restructuring of Alex and Ani. On October 28, the judge ruled that Rafaelian must repay the $5 million, plus interest and attorneys’ fees.

Lion Capital declined to comment on the ruling. A lawyer for Rafaelian also declined to comment.

The trouble started for Rafaelian, a former billionaire who Forbes estimates is now worth roughly $100 million, in the summer of 2019, when Alex and Ani lender Bank of America alleged that the jewelry company was in default on a $100 million line of credit. Lion Capital—which then owned 40% of Alex and Ani—stepped in and negotiated with the bank. (Last month, Forbes took a deep dive into Rafaelian’s troubles.)

As part of the negotiations, Rafaelian agreed to loan the struggling Alex and Ani $7 million, with Lion Capital paying for $5 million of that amount in the form of a loan from Lion Capital to Rafaelian, according to a lawsuit Rafaelian filed against Lion Capital earlier this year. In return, she claims, Lion Capital agreed to fund her two new businesses up to $1 million a year for two years.

Rafaelian also agreed to give up 20% of the company, reducing her stake to 41% and increasing Lion’s to 59%. She stepped down as Alex and Ani’s CEO in September 2019, becoming chief creative officer, but was fired from that role on May 8, she alleges, in the aftermath of the pandemic.

In the lawsuit Rafaelian filed against Lion Capital in June, she claims that the investment firm reneged on its promise to fund her new ventures. Lion Capital filed a motion to dismiss her suit in light of the New York judge’s ruling. In court documents filed last week, Lion Capital said Rafaelian’s lawsuit against them was an “attempt to distract, confuse, and muddy the issues, hoping to delay the inevitable consequences of [her] default.” 

Rafaelian alleges she was fraudulently incentivized to give Alex and Ani the loan, saying Lion Capital misrepresented its ability to fund her new business lines. However, the New York judge in Lion Capital’s case ruled late last month that even if Rafaelian prevails in her other action, she “cannot avoid liability” for the $5 million loan, as repayment of the loan was made unconditional.

Rafaelian launched Alex and Ani from inside her father’s jewelry factory in Cranston, Rhode Island, in 2004. Her signature design was an expandable wire charm bangle. In June 2017, the entrepreneur starred on the cover of Forbes’ Richest Self-Made Women issue, when Alex and Ani was pulling in estimated annual revenues of $500 million. By 2019, revenues had dropped closer to $400 million, even before the pandemic.

Last month, Rafaelian announced in an Instagram video that she would no longer be designing for Alex and Ani. She said she started a new company called Metal Alchemist, but didn’t offer any further details.


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