Samuels Jewelers filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court in the District of Delaware to reorganize the company and restructure its debt as the next step in a successful turnaround effort begun over two years ago.
Samuels is the 8th largest retail jewelry chain in America.
The Wall Street Journal reported the Austin, TX-based retailer was controlled by Mehul Chinubhai Choksi, the uncle of fugitive jewelry designer Nirav Modi, both of whom are wanted by Indian authorities in connection to an alleged multi-billion-dollar bank fraud.
According to first day motions filed in bankruptcy court, Wells Fargo will serve as DIP working capital agent on a senior secured super-priority revolving credit facility in an aggregate principal amount of approximately $4 million in new money revolving loans on an interim basis and $100 million following the entry of a final order. Wells Fargo will also agent up to $500,000 for the issuance of new letters of credit. Gordon Brothers Finance Company will serve as DIP loan agent on a term loan in an aggregate principal amount of $10 million.
The agreement between Samuels, Wells Fargo and Gordon Brothers will include a roll-up, upon the entry of a final order, of pre-petition loans and letters of credit in an approximate aggregate amount up to $84.16 million with respect to the prepetition revolving credit agreement and an approximate aggregate amount up to $10 million with respect to the pre-petition term loan agreement.
Randy McCullough, who became president and CEO of Samuels in March 1998, said, “This is a positive step that continues to build on the successful turnaround effort we began over two years ago. Our efforts have already resulted in greatly improved customer satisfaction and retention rates, improved associate productivity and improved EBITDA performance. When we emerge from these proceedings with a new capital structure, combined with the commitment of our management team and employees to execute our strategy, we believe we will finally be able to unlock Samuels’ tremendous potential.”
Senior management, including McCullough, have committed to building on the progress the company has achieved thus far and will remain in place to lead Samuels through the Chapter 11 proceedings.
This filing marks the start of the company’s fourth trip through bankruptcy. It was once known as Barry’s Jewelers, which filed for bankruptcy in 1992 and again in 1997, before changing its name to Samuels in 1998. Samuels filed for Chapter 11 bankruptcy in 2003 and emerged in 2004.
