Following a petition by debtors to force it into Chapter 7, Friedman’s Jewelers has filed a motion to convert its case into Chapter 11. The motion was granted by the U.S. Bankruptcy Court, District of Delaware.
This is be the second time the chain has gone into Chapter 11 in three years. It filed for Chapter 11 in early 2005 and it emerged a reorganized company later that year.
Friedmans owns 388 stores in 19 states, and wholly owned subsidiary Crescent Jewelers operates 85 stores in three states, papers say. Crescent Jewelers also plans to file a Chapter 11 case, the company said in court papers.
The company estimated its assets are between $100 and $500 million, and its debts are more than $100 million.
Top creditors include Sumit Diamond ($7.5 million), Rosy Blue ($6.2 million), and Masterpiece Diamond ($3.6 million).
The company said it took this action because its “revenues failed to meet expectations, as it experienced “declining store revenues … infrastructure and expenses became disproportionate to revenues.”