California-based jewelry chain Robbins Bros. Corp. filed for Chapter 11 bankruptcy protection on Tuesday, making it the latest major jewelry retailer to fall prey to the economic crisis.
According to documents filed in U.S. Bankruptcy Court for the District of Delaware, the 16-store Azusa, Calif.-based chain, known as an engagement ring destination, will be broken up into two parts and sold.
Barring any higher bids coming in during the Chapter 11 process, Robbins Bros. Corp. will sell the California stores to Robbins Bros. Jewelry–essentially to itself, according to court papers, which also say that the latter can purchase the stores, “free and clear of all liens, claims and encumbrances pursuant to section 363 of the Bankruptcy code.”
Robbins Bros., which expanded rapidly in the past few years, saw its financial condition begin to deteriorate in 2007, becoming progressively worse through 2008, court documents state.
According to its bankruptcy filing, Robbins Bros. felt the pinch of reduced spending by consumers, was riddled with debt from its expansion and had liquidity issues, making it difficult to stock up on merchandise and limiting the chain’s ability to advertise, court documents state.
The chain saw sales decrease about 3 percent last year–from $106.9 million in 2007 to $103.7 million in 2008–while losses more than doubled, increasing from $2.8 million in 2007 to $6.4 million in 2008. The company’s books show assets of $66 million, but liabilities of $77 million, according to court documents.
Among its top unsecured creditors, the chain lists in court documents some notable diamond and jewelry companies, including Leo Schachter Diamonds LLC based in New York (owed $2.71 million), Leo Schachter Ltd. in Ramat Gan, Israel (owed $1.82 million), Moshe and Namdar (USA) Inc. (owed $1.4 million), R and R Grosbard (owed $597,851) and Simon G. Jewelry Inc. (owed $554,455).