JUDGE CALLS CIRO CASE ‘LIQUIDATING SITUATION’

Byline: Jeff Siegel

NEW YORK — Ciro Inc., the fashion jewelry chain that just six weeks ago seemed close to a deal to be purchased out of Chapter 11 by a white knight, is now on the verge of liquidation.
“There is no doubt this is a liquidating situation,” Bankruptcy Judge Jeffry Gallet said at a hearing here last week. The hearing was supposed to be held to confirm Ciro’s reorganization plan, but it turned out quite differently after the prospective purchaser backed out of the deal.
Ciro had a deal to be bought by Pearl Street LP, a unit of Goldman, Sachs, and Cerberus Partners LP, an independent investor group, for $6.5 million, but poorer-than-expected October results necessitated an additional cash infusion, and the investment firms balked.
At that point, Ciro’s vendors tried to flush out other buyers and found Irwin Pearl Inc., the jewelry manufacturer, which made an 11th-hour $12 million offer for the chain, but said it needed more time to secure proper financing.
Judge Gallet refused to grant the additional time, leaving the future of Ciro in the air, but liquidation likely.
Debra McCullough of Shearman & Sterling, counsel to Ciro, told Gallet the firm was still trying to work out a financing deal to overcome a major stumbling block — not having merchandise shipped to Ciro stores in time for Christmas — but the judge’s response was not favorable.
“I have no confidence that one day, one week, one month or one year is going to make this plan work or any other plan work,” stated Gallet, who had already adjourned Ciro’s confirmation hearing for two days so it could work out its financing difficulties.
Although he did not order the firm to liquidate, Gallet told Ciro, whose stores operate under the Ciro of Bond Street and Kenneth Jay Lane names, that he would appoint a Chapter 11 trustee whose job will be to submit a plan that will likely lead to the sale of Ciro’s assets.
Kenneth Jay Lane, the fashion jewelry designer who licenses his name to Ciro for eight stores in the U.S. and seven more in Europe, told WWD he was disappointed about Ciro’s possible demise, but said most, if not all of the stores carrying his name, would continue to operate.
— Fairchild News Service

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