Creative Hairdressers, Inc., the parent company of Hair Cuttery, Bubbles, and Salon Cielo, announced an agreement to sell its assets to HC Salon Holdings, Inc., an affiliate of Tacit Salon Holdings, LLC, along with a plan designed to significantly reduce its debt obligations and establish a sound financial platform for long-term growth.

WHO: Vienna, Virginia-based Creative Hairdressers is one of the largest independent, family-owned chains of hair salons with more than 750 salons nationwide including Hair Cuttery, Bubbles and Salon Cielo. Founded in 1974 by Dennis and Ann Ratner, the salon chain operates in 15 states and the District of Columbia.

Tacit Salon Holdings (TSH), a socially responsible investment platform committed to sustainability, gender equality, and diversity inclusion, is a holding company formed to acquire salon platforms. TSH provides capital and infrastructure and teams up with industry leaders to acquire, reposition, and grow haircare assets in a socially responsible way.

WHY: While COVID-19 may have been the final push into Chapter 11, Creative acknowledges in its bankruptcy filings that it was subject to aggressive expansion campaigns of large competitors, which caused Creative to implement strategic initiatives over the last few years, including the closure of underperforming stores. Creative retained advisors in the fall of 2019 to help formulate a restructuring plan, including securing accommodations from landlords.

IN THEIR OWN WORDS: “We are extremely pleased to have reached a positive outcome that enables us to pay our talented salon professionals, field leaders and resource center associates, and then reopen our doors and save thousands of jobs for our outstanding salon staff,” said Phil Horvath, President of Creative Hairdressers, in a statement. “These have been unprecedented and trying times for everyone, and especially for our industry. Our new financial partners are excited about the long-term potential in our industry and our ability to rebound post-crisis. We look forward to re-opening our doors and building a stronger future for our business.”

“We’re happy to support Creative Hairdressers and its thousands of salon professionals as the company emerges from the COVID-19 crisis in a stronger financial position,” stated Azhar Quader, Chairman of Tacit Salon Holdings, LLC. “Hair salons are an important contributor to the fabric of life in communities across the country. We’re focused on saving jobs for salon professionals and building a strong, financially healthy company. We look forward to having Creative Hairdressers’ talented stylists provide excellent service to their customers for many years to come.”

DETAILS:

• Creative Hairdressers has entered into an asset purchase agreement with HC Salon Holdings, an affiliate of Tacit Salon Holdings, to acquire substantially all its assets, including the majority of its salon locations.
• In addition, as the senior secured lender, HC Salon Holdings, an affiliate of Tacit Salon Holdings, LLC, has agreed to provide the company with debtor-in-possession financing that will allow the company to continue operations, effectuate the sale process, and fund operating expenses, including its payroll and other obligations to employees.
• To implement the plan, Creative Hairdressers, Inc. and its affiliate Ratner Companies, L.C., filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Maryland.
• The company does not expect the filing will have a meaningful impact on its day-to-day business once its salons are able to reopen.
• At the time of the bankruptcy, Creative owned approximately 800 locations and had employed over 10,000 employees prior to its suspension of operations due to COVID-19.
• The business had approximately $440,000,000 in revenues for the fiscal year ending in September 2019.
• The investment by HC Salon, an affiliate of Tacit Salon Holdings, LLC, will allow Creative Hairdressers to continue paying its thousands of employees and reopen its salon locations, shuttered by the coronavirus pandemic, when allowed to do so.
• The investment also allows Creative Hairdressers to significantly reduce its debt obligations, it said in a statement.
• The sale of its assets to HC Salon is expected to close within 45 days.
• Creative Hairdressers, Inc. is represented by Shapiro Sher Guinot & Sandler. Carl Marks Advisors is acting as strategic financial advisor to assist the Company in the process. HC Salon Holdings, Inc. is represented by DLA Piper LLP (US).