The fine jewelry company is currently conducting last minute negotiations with its two large creditors, equity firms GECC and Harbinger (which together have over $520 million in secured loans to Finlay), according to the report provided by Steven Silverstein, chief executive officer of IDI New York. If negotiations fail, Finlay could leave debt valued at hundreds of millions of dollars.
The creditors are reportedly willing to work to prevent the bankruptcy, but only if vendors are willing to sign onto the plan and agree to accept delayed payments. The objective is to allow Finlay to survive up to at least August 2009.
“Otherwise, this may be the straw that breaks the camel’s back, and Finlay will possibly file for Chapter 11 in a matter of days,” according to the IDI report.
The jeweler proposal, as retold on the IDI portal been stated as follows: “Finlay is circulating a Secured Vendor Acceptance and Agreement to vendors. If vendors up to $25 mm claims sign (and Finlay only accepting $25mm), Finlay will not file Chapter 11 tomorrow. Agreement provides that vendors will participate in 3rd line for current receivables and will be paid 20% in 5 days, 10% in 90 days, 10% in 120 days and 10% in 150 days and 50% in 180 days.”
Silverstein warns that “Israeli diamantaires who trade with Finlay should be aware that the current issue will last only several more days during which time either many diamantaires will sign the agreement and ‘secure’ their invoices with Finlay – or else Finlay fine jewelers will go bankrupt. After this time, any diamantaire who is owed money by Finlay and has not signed the agreement may not receive any payment.”