Friedman's Jewelers Goes Chapter 11
By Rob Bates -- JCK Online, 3/1/2008 2:00:00 AM
For the second time in three years, Friedman's Jewelers has gone into Chapter 11, this time following a petition by its lenders to force it into Chapter 7 (liquidation) bankruptcy. The chain filed for Chapter 11 in early 2005 and emerged as a reorganized company later that year.
Friedman's owns 388 stores in 19 states. The company estimated its assets at between $100 million and $500 million and its debts at more than $100 million. Following Friedman's filing, wholly owned subsidiary Crescent Jewelers, which operates 85 stores in three states, also filed for Chapter 11.
The company said it took this action because it experienced “declining store revenues … [and] infrastructure and expenses became disproportionate to revenues.”
Top creditors of Friedman's include Sumit Diamond ($7.5 million), Rosy Blue ($6.2 million), and Masterpiece Diamond ($3.6 million). Prior to the filing, four of the company's creditors—Eurostar, Jewelmark, Rosy Blue, and Simply Diamond—filed a petition to force it into Chapter 7.
One banker suggested the move showed “a change in thinking” on behalf of the trade, noting the market was filled with rumors before the holiday that Friedman's wanted to negotiate a settlement with its vendors. But the attempt to force a Chapter 7 filing “shows the trade is saying we've had enough, that we're not going to just take [nonsense] from the retailers anymore,” this banker said.
Friedman's officials did not respond to inquiries for comment.
