Bankruptcy and Retailers and Banking & Finance and Specialty stores and Retail and Real Estate & Retail

Jeweler plans massive sale in bid to escape bankruptcy

October 3, 2011
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Hofmeister Personal Jewelers Inc. plans to begin an aggressive sale of its inventory next month in an attempt to pay down debt and move a step closer to emerging from bankruptcy protection.

Hofmeister, one of Indianapolis' best-known jewelry stores, filed for Chapter 11 reorganization in April, listing assets of nearly $3.8 million and liabilities of $5.4 million.

The jeweler said it isn't liquidating the store and plans to stay in business, but is asking the court to let it use “bankruptcy,” “Chapter 11,” “reorganization” and “inventory reduction” wording in its advertisements to help spur sales.

The store at 3809 E. 82nd St. said in a court filing on Thursday that, pending court approval, the sale will begin on Nov. 2 and continue until Feb. 14. The intent is to sell as much merchandise as possible during the Christmas shopping season and through Valentine’s Day.

“It just makes sense, and this is of course the time of the year to do it,” said Eric Redman, Hofmeister’s lawyer. “It’s by far the largest sales season.”

Hofmeister wants to hire Pittsburgh-based LFS Consultants to help it move merchandise and plans to pay it a sales commission of 4.5 percent, according to court documents. The commission will decline to 2.5 percent on jewelry items priced at $20,000 and above.

LFS, which specializes in helping jewelry retailers move or liquidate stores, will be able to bring additional inventory into the store and generate more short-term cash to benefit Hofmeister and its creditors, the filing said.

The jeweler’s largest creditor, the downtown Indianapolis office of Pittsburgh-based PNC Bank, is still owed more than $2 million on an original $2.5 million loan balance, Redman said.      

“This [sale] hopefully would knock that way down,” he said. “It’s fair to say that they’re going to be aggressive about pricing.”

LFS will direct the sale by conducting an advertising campaign and providing experienced personnel to assist and oversee the sale, court documents said.

Hofmeister is asking the court to authorize the sale without obtaining various state and local licenses and without observing state and local waiting periods.

“The requested waiver is narrowly tailored to facilitate the successful consummation of the sale pursuant to the terms of the agreement,” Hofmeister said in the filing. “Debtor does not seek a general waiver of all state and local requirements, but only those that apply specifically to liquidation sales.”

Besides PNC, Hofmeister also owes dozens of unsecured claims, including $1.1 million to Gems One Corp. in New York for inventory and $300,000 to PNC Bank for a townhome in Steamboat Springs, Colo. Hofmeister operates a small store there.

The jeweler had revenue of $5.2 million in 2010, according to the filing.

Gary Hofmeister founded the store in 1973 in downtown Indianapolis. The retailer later moved to the basement of Glendale Mall and, in 1992, to the current free-standing location at Clearwater Crossing.

Gary’s son, Carter, owns 85 percent of the business and manages operations, according to the filing.

 

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