The bankruptcy reorganization plan of Samuels Jewelers, the eighth-largest U.S. retail jewelry chain, has been approved by U.S. Bankruptcy Court, which confirmed it at a March 30 hearing. The company filed in 2003 for reorganization under Chapter 11 of the U.S. Bankruptcy Code, which lets a company continue to operate and manage its assets, and avoid liquidation, while it reorganizes and seeks to satisfy creditor claims.
A key element of the court-approved plan calls for conversion of a significant amount of debt to equity, to create a new capital structure and much-improved balance sheet, thereby providing a platform for Samuels to emerge from Chapter 11 as a private company and resume growth and profitability. Others features call for payment in full to “critical continuing vendors” over 18 months; assumption of substantially all of the Company’s leases; and continued employment of the senior management team.
Samuels filed for bankruptcy reorganization in August 2003, saying it was “over leveraged” with $78 million in debt built up in the past five years. It closed 10 stores and cut 50 jobs, but continued to conduct business as usual while working closely with a committee formed Aug. 19—comprising seven of its largest creditors—to complete the reorganization.
Since last August, Samuels has continued to implement its turnaround while working closely with vendors and creditors. Comparable store sales have increased 2% and 8.9% in January and February, respectively, says a company statement
“This is a major milestone for Samuels,” said Randy McCullough, Samuel’s chief executive officer and president. “We appreciate our secured lender and our other creditors working closely with us to design and implement a plan that provides a solid foundation for Samuels to build upon in the future.” Confirmation of the plan, along with recent positive sales results, he added, also reflect “the dedication and hard work from our terrific company associates who believe in Samuels and have worked diligently together to move Samuels forward.”
“Samuels’ reorganization was overwhelmingly supported by every class of creditor who voted on the plan and was completed very quickly and efficiently,” said Michael Tuchin of Klee, Tuchin, Bogdanoff & Stern LLP, the bankruptcy counsel for Samuels Jewelers Inc. “The fact that the reorganization was completed so smoothly is a testament to the efforts of the management team and all of Samuels’ employees.”
Samuels Jewelers now operates 102 retail jewelry stores in 18 states in regional shopping malls, power centers, strip centers, and as stand-alones under the names of Samuels, C&H Rauch, Schubach, and Samuels Diamonds. It sells fine-jewelry items in a wide range of styles and prices, with a primary emphasis on diamond and gemstone jewelry. It also sells jewelry online at SamuelsJewelers.com. Measured by retail locations, Samuels is the eighth-largest specialty retailer of fine jewelry in the country.