UPDATE: March 14, 2019: Samuels Jewelers is asking a bankruptcy court to convert its Ch. 11 status into a Ch. 7 in order to liquidate, according to court documents filed Tuesday. The company said it planned to reduce its excess inventory and sell substantially all of its assets to a going-concern buyer, but many of the stores began to underperform during inventory liquidation sales and interest in its assets was "limited." The only qualifying bid was a credit bid from Wells Fargo for a piece of its assets, but the company ultimately decided to shutter all stores and operations.
Samuels Jewelers has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware, according to court documents filed Tuesday. The process is expected to enable it to significantly reduce its outstanding debt, according to a company press release.
The company, founded in 1891 in San Francisco, is now headquartered in Austin, Texas and runs 122 stores and an e-commerce site that will remain open for business during the process, according to the release.
The company has already entertained joint bids from Gordon Brothers and Hilco to sell assets, which will go to pay down debt of more than $100 million, according to court documents.
It comes with little surprise that century-old Samuels may have trouble competing in the e-commerce era at a time when mid-level jewelry stores are siphoning away sales and juggernaut Tiffany is stepping up its game. But it doesn't help when key executives are accused of major financial crimes.
The company was previously controlled by Mehul Choksi, who has been accused of bank fraud, according to the Times of India, along with his nephew Nirav Modi, a jewelry designer and businessman. Modi is a fugitive who is reportedly swiftly making his way across the globe, allegedly evading authorities, according to various reports, including in the India Times. Choksi hasn't been affiliated with the company since early this year, according to The Wall Street Journal.
The company hopes to put all the drama — and its significant debt load — behind it, saying it will emerge ready to tackle the more mundane challenges of the retail business. Its bankruptcy filing comes as the holidays, one of the most important buying times for jewelry sales, loom.
"We are confident that we are taking the right steps for Samuels Jewelers," CEO Farhad Wadia said in a statement. "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. As we prepare for another holiday season, our national team members are ready to serve the families who will be shopping with us."