These David’s Bridal contractors are out as much as $12,000 after the company’s bankruptcy. They’ll likely never get paid.
It's not uncommon — or illegal — for independent contractors to lose payments when a company files for bankruptcy.
Bianca DePietro altered more than 100 dresses for David’s Bridal, the wedding gown company based in Conshohocken, but months after the work was completed, she still hasn’t received payment.
DePietro, a bridal designer with her own shop and studio in Fishtown, canceled appointments and freed up her calendar in early April for what she thought would be a quick way to make money toward a $20,000 medical bill for her sick dog.
She is one of several independent contractors who worked for David’s Bridal around the time of the company’s bankruptcy in April and who are still waiting to get paid for work they’ve already done or were scheduled to do.
“I thought, yeah … it’s going to take like a year, but I’m sure at some point, I’ll get paid for it,” DePietro said.
Now it seems unlikely she ever will, and it’s perfectly legal under bankruptcy law.
In September, following the July sale of David’s Bridal to business development company CION Investment Corp., the U.S. Bankruptcy Court of the District of New Jersey dismissed the company’s bankruptcy case because there were no assets left from the sale to pay those who were still owed money.
“Given the dismissal of the case, unpaid creditors will remain unpaid,” said Michael Sirota, co-counsel to David’s Bridal from the Cole Schotz P.C. law firm via email.
According to a statement David’s Bridal shared with The Inquirer, the sale to CION Investment, allows the company to remain “committed to never missing an event and for being a reliable partner to all of the businesses who help us do so.”
“David’s Bridal has strong partnerships across the bridal industry. We value every relationship that helps us make dreams happen, however, we do not widely discuss the terms of those partnerships in detail,” the company said through a spokesperson.
The Inquirer spoke with seven independent contractors who worked for David’s Bridal this past spring and filed claims for payments between $300 and around $12,000 for their work, expenses incurred, and lost wages for days they set aside to work with the company. (Not all were comfortable using their name in this article for fear of jeopardizing future employment opportunities.)
Diana DuHaime, a hair and makeup artist, who worked with David’s Bridal for about eight years, found herself out of work when the company filed for bankruptcy. She says she is owed $8,250.
Brian Hexter, a photography producer, filed a claim for around $12,000 for weeks of completed work and other weeks he had set aside to work for David’s Bridal.
Daniel Lidon, a photographer, filed a claim for about $7,000.
Their experiences shed light on the conditions and risks that independent contractors face when working with large companies — and what can happen when those companies file for bankruptcy.
Flexibility vs. risk
People choose to work freelance for many reasons, said Rafael Espinal, executive director of the Freelancers Union, a national nonprofit supporting independent contractors.
Freelance work offers a flexible schedule and gives workers the freedom to choose the projects they work on. Often they report earning more than they would as an in-house salaried employee with the same skills, Espinal said.
An estimated 126,650 freelancers worked in the Philadelphia metropolitan area in 2022, making it one of the top 15 U.S. cities for freelancers, according to a report published earlier this year by Fiverr, a platform that connects freelancers to work opportunities. Those workers brought in a projected $6,143,029,445 in revenue last year and on average made $48,504 across industries in Philadelphia for skilled independent work.
Freelancers can have more financial stability by spreading work across multiple companies, said Alex Hillman, cofounder of The 10k Independents Project, which supports independent work in Philadelphia.
“We’ve been taught that salaried positions are more stable, but companies have shown their cards that this is not true. When your entire income is tied to a single employer, that employer can have a huge impact on your livelihood,” Hillman said.
The number-one issue freelancers face is nonpayment, Espinal said. When that arises with a large company, freelancers are at a disadvantage because it is up to them to take the dispute to small claims court, where their client often has more means to pay for lawyers.
“The issue is that there aren’t enough protections in place in order for freelancers to get paid the money that they’re owed on time, or even at all,” he said.
‘Close to nothing’ is common, but legal
When a bankrupt company gets bought, as David’s Bridal did, the money made in that sale can be used to pay off some of the bankruptcy creditors, said Vincent Buccola, professor of legal studies and business ethics at the University of Pennsylvania’s Wharton School.
Bankruptcy is a way for businesses to shed some debt and continue on “a new footing,” Buccola said. “In the ideal situation, bankruptcy is meant to get rid of that debt, which means that some people are going to take it on the chin, by definition, because it means there’s not enough stuff to go around to pay off all the creditors.”
Financial lenders such as banks typically get paid first, and then if there is anything left over, that is divided among other entities that don’t have liens on the company’s assets.
It’s common that those who are owed money in a bankruptcy and don’t have a lien on the company — which is typical for independent contractors — will get paid close to nothing or nothing, Buccola said.
“Sometimes that creates some very inequitable-looking outcomes because you’ve got a bunch of people who have kind of contributed something to a business, and they’re not going to all get repaid,” he said.
Protections for freelancers
There are a few steps freelancers can take, regardless of whom they work with, to make sure they get paid the money they’re owed, experts say.
Freelancers can demand cash payment upon completion of the work, so as not to extend credit to their clients, Buccola said. They should also have a written contract, Espinal said; only about 30% of freelancers do, his organization has found. Freelancers also don’t have to accept the contract that the company offers them, Hillman said.
“A lot of people are afraid to negotiate their contract [for fear of losing the project], or don’t even know that they can,” Hillman said.
If freelancers find themselves dealing with a company that has filed for bankruptcy, Espinal recommended that they seek legal aid to file a claim in bankruptcy court and tune in to the creditor meetings to ask questions and understand where their claim is in line. They could also reach out directly to the company.
On the legislative level, New York City enacted a first-of-its-kind law in 2017 with the “Freelance Isn’t Free Act,” providing protections for workers in nonpayment situations including requiring companies to use contracts for work above $800, requiring them to provide payment on time and in full, and providing city assistance to navigate a nonpayment situation.
Similar legislation has since been passed in Seattle and Los Angeles. The Freelancers Union is looking to bring the ordinance to Philadelphia and plans to engage City Council in January to identify the appropriate bill sponsor, Espinal said.
For one independent contractor, the David’s Bridal bankruptcy has provided inspiration. Lidon, the photographer, decided to go back to school after 15 years to finish his degree in business because of his experience. He says he might study law to fight for better rights for freelancers.
He said he’s interested in “applying rights to people in our industry.”