By  on September 25, 2009

Gordon Brothers Retail Partners on Thursday won the bidding auction for Finlay Enterprises Inc. The liquidation firm had been the stalking-horse bidder for the liquidation of Finlay’s assets.

Finlay filed for Chapter 11 bankruptcy court protection in August in Manhattan.

Manhattan bankruptcy court approval of the winning bid is still required and a hearing is set for today. According to Finlay, Gordon Brothers will conduct “store closing” sales at all the jewelry firm’s retail locations and its two distributions centers.

The Chapter 11 petition said, as of July 4, the company had $331.8 million in assets and $385.5 million in liabilities. In the fiscal year ended Jan. 31, the company registered a net loss of $107.3 million on sales that rose 5.2 percent to $754.3 million.

Embarking on a diversification strategy as the consolidation trend spread, Finlay acquired Carlyle & Co. Jewelers in 2005, L. Congress Inc. in 2006 and, from Zale Corp., the Bailey Banks & Biddle chain in 2007, helping to preserve sales but also adding to its debt load.

Finlay, through its wholly-owned subsidiary, Finlay Fine Jewelry Corp., is a retailer of fine jewelry operating luxury stand-alone specialty jewelry stores and licensed fine jewelry departments in department stores throughout the U.S.

Arthur E. Reiner, chairman, president and chief executive officer, said in court papers that licensed departments accounted for 64 percent of sales in 2008, with an average unit sale price of $272. However, the average selling price for items within the stand-alone stores was $1,200 or more, Reiner said.

The number of locations at the end of the second quarter ended Aug. 1 totaled 182, which includes 67 Bailey Banks & Biddle, 34 Carlyle and four Congress specialty jewelry stores. The company also has 77 licensed fine jewelry departments, down from 700 less than two years ago.

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