Samuels Jewelers joins the list of retailers closing its doors forever.
A bankruptcy judge in Delaware approved the Austin, Tex.-based company’s request to adjust its Chapter 11 bankruptcy protection to a Chapter 7 on Wednesday. Under the terms of a Chapter 7 bankruptcy, however, the retailer will be forced to liquidate.
The jewelry company, which operates under the Samuels Diamonds, Rogers, Andrews and Schubach nameplates, filed for Chapter 11 bankruptcy protection on Aug. 7, 2018, “with the dual-track goal of reducing its excess inventory and selling all of, or substantially all of, its assets to a going-concern buyer,” according to court documents.
“We are confident that we are taking the right steps for Samuels Jewelers,” Farhad Wadia, Samuels Jewelers’ chief executive officer, said in a statement at the time. “Our customers around the U.S. can continue to count on an outstanding shopping experience and excellent service whenever, wherever and however they choose to shop with us.”
That meant the continued operation of its 122 retail locations across the nation and the company’s web site.
But in February, Samuels, which was founded in 1891, began closing unprofitable stores while trying to renegotiate its remaining real estate leases.
This wasn’t the company’s first trip through bankruptcy court. In 2003, Samuels filed for Chapter 11 bankruptcy protection, hoping to reorganize approximately $78 million in debt. But this time, a new buyer never materialized.
“Unfortunately, many of the stores subject to the inventory liquidation sales underperformed when compared against expectations, and…interest in [Samuels Jewelers] assets was limited,” court documents state.
In fact, the only bid submitted was a credit bit by Wells Fargo, Samuels’ debtor-in-possession lender.
“With no possibility of a going-concern sale, the approaching maturity date under the [debtor-in-possession] agreement occurring on Feb. 28, 2019 and the deadline to assume or reject unexpired leases of nonresidential real property occurring on March 5, 2019, [Samuels Jewelers] determined that the immediate, rolling closure of its retail stores and operations was in its best interests,” the court documents state.
The judge’s approval comes as rival jewelry companies continue to lose sales. American jewelry company Signet Jewelers announced its latest quarter earnings Wednesday before the bell, falling short on top and bottom lines. Sales at luxury jewelry Tiffany & Co. also slipped last quarter.
Meanwhile, former Samuels Jewelers executives are embroiled in other legal troubles, as U.S. investigators continue to pursue an alleged bank fraud. On Jan. 29, 2018, Punjab National Bank lodged a complaint with Indian authorities saying former Samuels Jewelers executives fraudulently borrowed approximately $2 billion from the company.
A court document last month stated that, “based on the investigation to date, the examiner concludes that there is substantial evidence to establish the knowledge of and involvement by [Samuels Jewelers] and certain current and former senior officers and directors in fraudulent conduct in the U.S. that is consistent with aiding in the fraud alleged by the Indian authorities.”
Samuels Jewelers could not be reached for comment.