Ceases Operations, Will Liquidate, a formerly high-flying, publicly traded jewelry e-tailer, has ceased operations and plans to liquidate, according to court papers.

At press time, the company’s site was still online, but said it was “temporarily under construction,” and no auctions were listed.

The company ceased Web sales on June 12, according to a declaration by interim CEO Evan Warshawsky. The former chief financial officer made the statement in response to a motion, filed June 26 in Los Angeles federal court by five of the company’s vendors—Dinurje Corp., Kiran Jewels, Quintessence Jewelry Corp., Orchid Jewelry Mfg., and Unique Designs—to force the company into a Chapter 7 filing. 

Joel B. Weinberg, president and CEO of Insolvency Services Group, which now controls the company’s assets, said in an affidavit that the company owes $19 million to lender Salus Capital Partners and $8.4 million in unsecured trade and expense debts.

All of which marks an ignominious end to a company that for a long time was second only to Blue Nile in the jewelry e-tail space and regularly recorded more than $100 million in annual sales. The site was launched in 1998—growing out of a chain of pawnshops—and specialized in closeout jewelry in an instant-auction format, with bids beginning at $1 and auctions extended if there was buyer interest. In 2007, it began trading on NASDAQ, and that year it boasted $187 million in revenue and $18 million in profits. In a 2008 interview with JCK, founder and CEO David Zinberg predicted it would do $1 billion in business within the next five years, noting it sold some 15,000 pieces a day.

But the site also experienced controversy, after Internet critics hit it with a variety of charges, including shill bidding (which it denied). Following the financial crisis, sales declined, and it logged annual losses in 2010 and 2011. The next year, the company issued a going-concern warning, and in Sept. 2012, it was purchased by the Glendon Group and went private.

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JCK News Director

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