Two noted regional chains—California’s Romano’s Jewelers and Maine’s G.M. Pollack & Sons—are headed for Chapter 7.
On July 13, California federal court Judge Maureen A. Tighe ruled that Romano’s Jewelers should have its Chapter 11 case converted to Chapter 7. The company—a 24-year-old jeweler that once claimed 10 stores, though its site now lists only four—went into Chapter 11 five years ago in California federal court, and had its reorganization plan approved three years later.
In May and June, federal and state tax authorities petitioned the court to convert the case to Chapter 7, citing more than $200,000 in unpaid taxes.
Lawyers countered that forcing the company into Chapter 7 would mean a worse deal for creditors—some of whom filed statements opposing the motion—and the dismissal of its 40 employees.
“No one is contending that [Romano’s] has been a model of performance since confirmation of its [bankruptcy] plan,” counsel wrote in a July 2 filing. “Yes, it has been untimely in payment of its taxes from time to time since confirmation. Nevertheless, it has hobbled along…over a two- year period in substantial compliance with its payments pursuant to the terms of the plan.”
Even so, the Judge ruled otherwise, and a Chapter 7 trustee will soon be in charge of the company, the company’s lawyer confirmed, adding its fate will be in the hands of that trustee. A spokesperson for the trustee declined comment.
Since filing for Chapter 11, the store has suffered from numerous legal problems, including the indictment of its owner on charges of identity theft and a reported investigation over its automatic deductions for military service members.
G.M. Pollack & Sons’ July 11 voluntary filing for Chapter 7 in Maine federal court comes shortly after the company closed most of its stores, except for one. An employee told JCK that the one remaining store was also closing.
The company listed $500,000 to $1 million in assets and $1 million to $10 million in liabilities but added no further details at press time.
The company dates from 1955 and was once a 13-store chain. In 2009, it was purchased by a consortium of employees.