Geneva Group Up for Bid After Filing for Chapter 11
By Aaron Recksiek, CW21
Geneva Watch Group is a New York City-based watch company that makes licensed watches for designer brands Kenneth Cole and Tommy Bahama. They also own their own brands Freestyle, a surfing-inspired watch line, and Game Time, a watch line that produces watches licensed by the NFL, MLB, NBA, NHL, and other sports.
Known primarily as Advance Watch Group Ltd before being purchased by the Milan, Italy-based Binda Group in 2008, the company was doing well with estimated revenue of $192 million and 25 million watches sold. Since the purchase, the global economy has struggled as have many aspects of their business. Problems include a weak watch market, license losses, operational challenges, failed new-product launches, and failure to curb spending.
In June of 2015, Binda Group was subject to insolvency proceedings in Italy, similar to a Chapter 11 filing, which only made the dire economic situation worse by handicapping the liquidity of the company and forcing them to restructure their operations. They fired many of their top executives, which had a negative effect on company morale. Employees of the Far East offices have even suffered physical threats due to the past due amounts owed to suppliers. This caused them to shut down those offices, putting a major burden on the supply chain.
On October 1, 2015, Geneva Watch Group made a final effort to restructure and save the company by filing for Chapter 11 bankruptcy. They hope to sell off the assets to help them settle the bankruptcy case. The current debt load stands at about $98 million owed to more than 300 different creditors. On
November 15, 2015, almost all of the assets of Geneva Watch Group were acquired by Sunshine Time, Inc., a subsidiary of Time Watch Investments Limited, also known as TWI. TWI produces Tian Wang brand and Balco brand watches, which are mostly sold in China. They account for over 10% of Chinese watch-brand sales in China by market value. In early November, TWI had placed a $15 million bid for the assets, and Judge Martin Glenn of the US Bankruptcy Court in Wilmington, Delaware, approved the sale as the highest bid received.
The cost of the assets is barely enough to pay back the secured creditors to the company pegged at $13.3 million. This puts the unsecured creditors in a difficult situation, as it is projected they will receive at most 5% payback on their loans to the Geneva Watch Group. The biggest unsecured creditors are worldwide retailer Dillard’s Department Stores, Chinese retailer G&Y Co., and Chinese manufacturer State Electronics Ltd.
The company has vowed to pay back all their delinquent loans eventually and has also received commitment from Wells Fargo to provide $17.5 million in financing as part of the asset transfer and acquisition.
Aaron Recksiek is an independent watchmaker in Salt Lake City, Utah. He is a graduate of the 2008 WOSTEP class at the Lititz Watch Technicum.