Friedman's Hires Help with Investigations, Plans Restructuring

In its attempt to work out problems in the troubled company, jewelry retailer Friedman's hired restructuring advisers and set up a special litigation committee to deal with a months-long federal fraud investigation.

Friedman’s said it formed a special litigation committee to oversee and coordinate responses to the investigations and any other litigation that may arise.

The company is facing two major investigations, one by the U.S. Securities and Exchange Commission and another by the Justice Department. The investigations were initiated following a fraud lawsuit filed by Capital Factors against a company that supplied jewelry to Friedman's and others.

The company also hired Kroll Zolfo Cooper LLC as restructuring advisers, and said representatives of that company would serve as chief restructuring officers.

Its shares were delisted from the New York Stock Exchange earlier this month.

The company also reported that Robert Cruickshank, who was replaced as chairman earlier this month, resigned as a director. Friedman's named Allan Edwards, president of Morgan Schiff & Co. as chairman on May 14.

Morgan Schiff is an investment bank and broker controlled by the holder of Friedman's Class B common stock. These class B shareholders have removed one director and named five new ones earlier this month, but two directors resigned within days.