LKI Settles Suits With Insurers

Lazare Kaplan International has settled several ongoing
lawsuits with its insurers, it announced in a statement
released July 6.

The New York diamond company sued Swiss Re
International, The Marine Insurance Company, and several other insurers in
April 2010, charging they failed to reimburse it for more than $135 million in
diamond losses incurred from 2007 to 2009.

As a result of the settlement, LKI will be paid $32 million,
on top of a previously announced payout of $28 million by its U.S.
underwriters. In return, the company agreed to settle all claims and dismiss
all pending litigation, but retains the right to pursue recovery of its assets
against third parties. 

The publicly traded company’s dispute with its banks and
insurers had caused what it called “material uncertainties” that left it unable
to file financial statements since 2009
. This in turn caused LKI
to be delisted from the New York Stock Exchange in June 2010.

The company said it is still reviewing whether it has resolved
the uncertainties to such an extent that it can finalize its financial

LKI’s statement noted it remains in litigation against
Antwerp Diamond Bank.

In December 2009, ADB announced it was terminating the $25
million and $45 million facilities it granted LKI. In March 2010, ADB sued LKI in the Antwerp
Court of Commerce, seeking payment of amounts it claims were owed under the $45
million facility. LKI denies that any
amounts are currently owed to ADB.

According to a press release, in early 2010, LKI contacted
the management of ADB’s parent company concerning the loss or thefts of
certain company assets and the “potential involvement of ADB and senior members
of ADB’s management” in the thefts. It
says it is contemplating litigation against ADB in U.S courts.

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