Fortunoff, the US jewellery and home furnishings retailer, has filed for Chapter 11 bankruptcy protection less than one year after being brought out of bankruptcy by NRDC Equity Partners.
NRDC acquired Fortunoff last March pledging to invest $100 million into the company and open new stores.
However, today, the company blamed “dismal” sales over the holiday period, weak consumer demand for high-end furniture and jewelry, and a lack of credit from lenders.
In bankruptcy documents, Fortunoff said it lost $42 million in the nine months of operation between March 2008, when NRDC’s acquisition closed, and the end of November. More than $72 million is owed on principal loans, with Wells Fargo Retail Finance and UBS Securities among the main lenders.
Fortunoff said it had been “approached” by numerous “buyers, investors and partners”, including private equity firms and liquidators, about a potential sale in the run-up to filing for Chapter 11. However, without “necessary liquidity to continue to operate outside of bankruptcy”, the company decided to file for protection.
Fortunoff, which has 1,780 employees, is now planning to auction “all or substantially all of [its] assets”. Neither Fortunoff or NRDC were available for comment at press time.
It is one year and one day since NRDC, founded by AREA Property Partners’ William (Bill) Mack and Lee Neibart together with former National Realty & Development Corporation executives Richard Baker and Robert Baker, announced it would acquire Fortunoff. NRDC also bought the 48-store Lord & Taylor retail chain for $1.2 billion in 2006.
At the time of the Fortunoff deal, Richard Baker said: “Fortunoff is a valuable brand with great potential for continued growth. We plan on investing $100 million into the Fortunoff business, with investments being made in both existing and additional stores.”