Friedman’s Inc., embroiled in a fraud investigation, said on Monday it delayed filing its annual report with the U.S. Securities and Exchange Commission and received a default notice from its lenders.
Friedman’s said in a statement that its lenders continued to support the credit agreement but had the right to terminate their support at any time.
“As the preliminary financial information becomes available, the company will be in discussions with its lenders regarding these matters in an attempt to resolve them prior to the filing of its annual report,” Friedman’s said in a statement. “At present, the company’s lenders continue to provide the company with the benefits of its credit agreement.”
Friedman’s, which said in November it would restate its financial results for at least the last three years because of accounting for bad debts, said that the delay is related to the restating of its financials for the past three years and the ongoing federal probe being conducted by the SEC.
Savannah, Georgia-based Friedman’s is one of two U.S. jewelry retailers facing SEC and Department of Justice investigations stemming from a fraud lawsuit filed by Capital Factors Inc. against a company that supplied jewelry to Friedman’s.
Whitehall Jewellers Inc. is also under investigation, and said last week that it restated financial statements for fiscal 2000, 2001, and 2002.
Friedman’s previously said that its allowance for doubtful accounts may total more than 17% of its accounts receivable.