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Finlay Files Chpt. 11

Jewelry retailer to sell assets at auction

Aug 6, 2009 3:06 AM   By Avi Krawitz
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RAPAPORT... Jewelry retailer Finlay Enterprises Inc. filed for Chapter 11 bankruptcy protection in New York on Wednesday, and said that, subject to court approval, it plans to sell its business and assets in an auction. Finlay appointed Gordon Brothers Retail Partners to act as the “stalking horse” bidder in the auction.

“Although today is a difficult day for all of us at Finlay, we have arrived at this decision after careful analysis and believe it is necessary given the continued challenging economic environment that has resulted in our current business condition,” explained Arthur E. Reiner, Finlay’s chairman and chief executive officer (CEO). The company estimated the value of its assets at between $500 million and $1 billion, and its liabilities in the same range. Finlay reported that it had between 10,000 and 25,000 creditors at the time of filing. 

The filing comes after the company more than doubled its first-quarter loss to $28.7 million despite seeing sales rise 12 percent to $159.3 million. In an attempt to dramatically cut costs, in February the company undertook to restructure by exiting its department store operations and closing nearly half its specialty stores. As of August 1, 2009, the end of its second fiscal quarter, Finlay had 182 locations, including 67 Bailey Banks & Biddle stores, 34 Carlyle stores, four Congress specialty jewelry stores and 77 licensed departments with The Bon Ton.

Rumors of a pending bankruptcy started to simmer in June when Finlay failed to make a semiannual interest payment of $1.7 million to holders of Finlay Jewelry’s senior notes that month. This was followed by unconfirmed reports this past week that the company had received two bids in anticipation of the bankruptcy filing. Nevertheless, the National Retail Federation (NRF) listed Finlay as No. 8 on its Hot 100 Retailer list for growth in 2008. Following the purchase of Bailey Banks & Biddle from Zale in late 2007, the additional revenue for 2008 pushed Finaly's independent store sales up 38 percent. 

Finlay listed some of its top creditors as:

U.S. Bank $40.6 million
Vaishali Diamond Corp. $2.7 million
Royal Jewelry $2 million
Richline Group $1.8 million
BH Multi Com $1.26 million
Le Vian $1.2 million
Citizen Watch $1 million
Weindling $755,992
Bulova $728,203
MJJ $690,998
Cybel $604,443
Diamond Source $578,497
Uni-Creation $475,808
Tacori $474,672
Julius Klein $442,516


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Tags: Banks, Finlay, Jewelry, Zale
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