Jewelcor files Chapter 11 plan

Discount Store News, March 18, 1991

Jewelcor Files Chapter 11 Plan

WILKES-BARRE, Pa. -- Jewelcor Inc. has filed a Chapter 11 reorganization plan that calls for executives to purchase for undisclosed amounts the company's three different catalog showroom/jewelry businesses.

Jewelcor president Seymour Holtzman and the separate management of each of the three subsidiaries--coordinator Jewelcor Merchandising, the Jewelcor showroom in Edwardsville, Pa., and the S.A. Peck jewelry specialty store in Chicago--will invest in the different firms.

Charterhouse Equity Partners, a diversified New York investment firm, will acquire controlling interest in Jewelcor's main operation, Gruen Marketing, a major watch manufacturing and distributing business, for $15 million. Other funding will come from Holtzman, who will be the second largest shareholder in Gruen by investing $1.5 million and remain its chairman and chief executive officer, and from Gruen's president Earl Zimbler, who will provide $600,000.

Charter House's other holdings include Del Monte Foods and Fleet Bubble Gum.

Jewelcor Travel Services, which wasn't part of the parent's bankruptcy filing last October, will be acquired by Holtzman and that firm's management.

The company asserted that the "cornerstone" of its reorganization fell through in January when Alden Press of Elk Park, Ill., failed to complete its purchasing of its Suburban Publishers subsidiary. Jewelcor has filed a $200 million suit in the United States Bankruptcy Court for the Middle District of Pennsylvania in Harrisburg, Pa., to force Alden to complete the deal or pay damages.

The various acquisitions have to be completed by April 30, so that the Chapter 11 reorganization, pending before Robert J. Woodside of the Bankruptcy Court, can take effect.

The Jewelcor Merchandising group is "evaluating the coordinator's future," a spokeswoman said. The coordinator last year published a full catalog and specialty books for jewelry retailers. Its Jewelcor Wholesalers arm includes Delta Diamonds, a jewelry manufacturing business.

The Jewelcor showroom, she said, plans to maintain its operation, with the focus on jewelry, gift and camera and electronic merchandise.

Gruen, which earned $15 million last year, has obtained a working capital loan from CIT, a financial services firm. Its operation will be moved from Wilkes-Barre to its Exeter, Pa., distribution plant.

The company's prime creditor, the Bank of Boston, which funded Jewelcor's $84 million leveraged buyout, is owed $105 million. It will receive $35 million and forgo the remaining $70 million debt.

Jewelcor's other creditors have formed two committees, one for Gruen and the other for all the non-watch businesses, and each has approved the reorganization plan.

Gruen creditors are to receive 75 cents on the dollar within four years. The non-watch creditors will obtain an interest in a Jewelcor-owned Fort Worth, Texas, office building and will be paid according to a yet-to-be-determined formula.

Holtzman said he and other top executives lost about $8 million because of the bankruptcy. He repeated his previous contention that the Chapter 11 filing was due to "the pandemonium which exists in the banking community today." Jewelcor filed for bankruptcy after the Bank of Boston sued in Luzerne County, Pa., Court for payment of its loans to the retailer.