Synthetic gem prices fell so fast that WD Lab Grown Diamonds couldn’t make a profit, the company’s former CEO, Mike Grunza, said during a Delaware bankruptcy proceeding this week. WD liquidated in October.
“[WD] was a very profitable business early on,” Grunza said in the creditors’ meeting, held Nov. 13. “[Then] the pricing [of lab-grown diamonds] got to such a low point. In one year alone it dropped about 83%. The year before that, it dropped about the same amount. We could not keep up with the rate that the market was declining.”
Ultimately, producing the diamonds cost the company more money than it could make from selling them.
Grunza, who was appointed CEO last year, said the natural diamond industry “did a really great job of differentiating…things that came out of the ground from what we were producing.”
WD spent most of this year looking for a buyer, he said, and while it received a “handful” of offers, they were all too low to accept. Eventually, main lender Tree Line foreclosed on its loan. Tree Line was originally owed $66 million and is still owed $30 million, Grunza said.
Asked about WD’s part-ownership of revived heritage brand Oscar Massin, he said, “Instead of paying [for diamonds] in cash, [Massin] paid in stock. That is something the creditor [Tree Line] has swept up.” Oscar Massin did not return a request for comment.
“[We] do intend to use the chambers to make stuff for whoever wants them,” he said. “[Jewelry] is not the purpose of the business, though we [may sell gems] in the interim for cash flow.… It is not where the business can afford to be in the future.”
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