LID’s newly appointed CEO Lyle Rose today talked to JCK about the company’s Chapter 11 filing:
Why They Declared Chapter 11: We have been trying to negotiate in good faith with the banks and every time it seemed things were going forward we ran into a situation where they threatened a demand. … We thought everything was going fine until we had our bank account wiped out last week. What am I going to do – wait for them to seize $80 million in inventory and sell it for $8 million? We had to declare bankruptcy to protect ourselves.
Where The Company Goes From Here: At the moment I am stronger than I was on Friday. I don’t have this 800 pound monkey on my back making threats. The debt to the trade is under $350,000 and everybody will be paid. … We are here and we are strong and we are growing. The customer service will be there and as far as I’m concerned it’s business as usual. We still have our factory in India and we are still producing … Chapter 11 is not bankruptcy. Chapter 11 means protection from unreasonable people. We are anything but bankrupt.
Incidentally, one of the banks I spoke to basically agrees with this, saying the company has lots of assets, but there were problems with a “management style that created discord.”
Rose said that the filing should not impact the company’s Israeli parent, which is a sightholder, or the company’s DTC status. Still this is something of an embarrassment for the DTC, as LID is the second sightholder sightholder-related company to go Chapter 11 in the last few months. (Fabrikant, of course, being the first.)
In somewhat related news, there is talk of Barclays taking over ABN-AMRO, and speculation over what that will mean for ABN’s considerable diamond and jewelry portfolio.
A list of LID’s trade creditors can be found here.
UPDATE: As per Edahn’s comment, “sightholder” has been changed to the less exact ”sightholder-related company.”
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