Leo Robbins and Sons, the four-store chain based in Philadelphia better known as Robbins Diamonds, has filed for Chapter 11, two weeks after five of its creditors filed an involuntary chapter 7 petition against it.
According to court papers, the company does "not intend to liquidate [its] business," but will use Chapter 11 to "restructure [its] obligations and reorganize [its] affairs."
In court papers, owner Jerry Robbins blamed the filing on the economic downturn, which caused a "substantial reduction in sales." In December 2008, Sovereign Bank froze the company’s credit. He said Robbins owes Sovereign Bank $6.8 million, which is composed of numerous credit facilities, and also owes $3.4 million to trade creditors. An effort to reach an out-of-court restructuring with unsecured trade creditors failed.
Top unsecured creditors include the Salant Group ($899,700); R and R Grosbard ($257,679); Leo Schachter and Co. ($182,772); the New Jersey branch of Overseas Diamonds ($159,496), whose parent company has filed for the Belgium version of bankruptcy; and True Romance ($119,595). Also listed were Yerushalmi Brothers, Moshe Nadmar and Co., B Nemirofsky and Son, Golden West Mfg., and Ema Jewelry.
The chain has 52 employees and locations in Philadelphia; Allentown, Penn.; Newark, Del.; and Hamilton, New Jersey.