Finlay Jewelers Last Minute Survival Strategy

U.S. jewelry retailer Finlay may face bankruptcy protection proceedings. The company is negotiating with two large creditors, equity firms GECC and Harbinger, which have provided Finlay about $520 million in secured loans.

According to Diamond Intelligence Briefs (DIB), at the end of December 2008, Finlay's trade debt was only about $40 million.

The two equity firms expressed willingness to prevent Finlay’s bankruptcy - by offering trade vendors to accept delayed payments. Delaying payments will give Finlay necessary breathing room to survive at least until August. Otherwise, according to DIB, Finlay may have no choice but to file for Chapter 11 bankruptcy protection.

According to the Israel Diamond Institute (IDI) website, if traders do not accept the offer, Finlay’s bankruptcy filing may take place “within days.”

The offer, according to the IDI, advised that the “If suppliers with $25 million claims sign [the agreement], Finlay will not file for bankruptcy protection. According to the agreement, traders will be paid 20 percent of their debt in 5 days, 10 percent in 90 days, 10 percent in 120 days and 10 percent in 150 days and 50 percent in 180 days.”