Report: Friedman's Files for Chapter 11

Friedman's Jewelers has successfully filed for Chapter 11 bankruptcy protection after a group of suppliers filed a petition to force it into Chapter 7, JCK Senior Editor Rob Bates reported. This is Friedman's second Chapter 11, and analysts are voicing doubts that the company will rise from the ashes of its current woes.

The motion to covert its case into Chapter 11, granted by the U.S. Bankruptcy Court in Delaware, came after the U.S. arm of Rosy Blue, Paul Winston-Eurostar and Jay Gems Inc – owed a total of $9.1 million – attempted to force the jewelry retailer into Chapter 7 bankruptcy.

The U.S. jewelry chain emerged from its previous Chapter 11 in December 2005, announcing that its reorganization plan became effective on December 9, and closed a $125 million exit financing facility provided by CIT Group, Inc.

According to Bates, Friedman's wholly owned subsidiary Crescent Jewelers also plans to file a Chapter 11 case.

The company, he adds, estimated its assets as being between $100 and $500 million, and its debts at more than $100 million. Creditors include Sumit Diamond ($7.5 million), Rosy Blue ($6.2 million) and Masterpiece Diamond ($3.6 million).

Previously it was disclosed that a sum of $1.9 million is owed to Paul Winston-Eurostar and approximately $950,000 to two affiliates of Jay Gems

The company cited declining store revenues for its failure.