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Fortunoff Files Chap. 11, Names Industry Firms in List of Unsecured Claims

Feb 6, 2009 9:00 AM   By Jeff Miller
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RAPAPORT... Fortunoff filed for Chapter 11 bankruptcy protection on  February 5, 2009, and expects to remain in operation during the process. In court papers obtained by Rapaport News, the retailer described how its sales turned very weak following the economic collapse in September 2008. Fortunoff did not list its most recent sales figures, but told the court that for the nine months ending November 30, 2008, sales were slightly more than $260 million and operating losses totaled more than $42 million. At the time Fortunoff filed Chapter 11, it told the court, it had a number of confidential agreements with potential buyers and investors, and these offers to invest, purchase or liquidate will be presented to the court in the coming weeks for authorization to complete the sales.

Fortunoff began experiencing a severe liquidity crisis in January, when, according to the court papers, after a very weak Christmas sales season, vendors tightened their credit terms, placing pressure upon Fortunoff's cash needs. The retailer stated that the outstanding principal amount of all loans as of February 4 was more than $68 million and that it held outstanding letters of credit for $3.6 million. Fortunoff sought court approval to enter into a debtor-in-possession (DIP) credit agreement with Wells Fargo Retail Finance and other lenders for a principal funding amount of up to $80 million. 

A number of diamond and jewelry industry companies were on Fortunoff's list of the 30 largest unsecured claims against it, including:

Michael Werdiger Inc. in the amount of $992,232
Disons Gems in the amount of $624,534
Swatch Group in the amount of $589,921
Gucci Watch in the amount of $580,715
Le Vian in the amount of $506,883
Sunny Creations in the amount of $491,502
Fossil Partners in the amount of $320,955
OJM in the amount of $310,833
Assael International in the amount of $304,569
William Levine in the amount of $301,945
Christopher Designs in the amount of $284,990
Novell Enterprises in the amount of $282,548
Seville Watch Corporation in the amount of $277,758
Dov Schwartz Inc. in the amount of $272,902


Tags: Jewelry
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