Hofmeister Personal Jewelers Inc. plans to pay off its creditors over seven years as part of the well-known Indianapolis retailer’s bankruptcy restructuring.
Hofmeister filed for Chapter 11 reorganization in April 2011, listing assets of nearly $3.8 million and liabilities of $5.4 million.
According to court records filed Thursday, the jewelry retailer will begin annual installment payments Dec. 31 to PNC Bank, its largest creditor.
Hofmeister’s payments will begin at $150,000 and grow to $405,000 by 2019 as the store pays down about $1.8 million in remaining principal with the Pittsburgh-based bank’s Indianapolis office. Payments will include an additional 5 percent in interest.
The No. 2 secured creditor, Hearts on Fire Company LLC, will receive a total of approximately $443,000 over the same period. The company will not pay interest as part of an agreement with the ring and diamond vendor.
Unsecured creditors owed more than $2,500 each will receive payments in full, totaling about $500,000 over the seven years.
Meanwhile, unsecured creditors claiming they are owed less than $2,500 will receive 10 cents on the dollar at the end of 2012.
Hofmeister’s attorney Eric Redman, of Redman Ludwig PC, said the payments to the smaller creditors are being made in one lump payment instead of in installments as a convenience.
“It’s just not worth 70 people getting 10 bucks a year or some tiny amount,” Redman said.
The northeast-side jeweler, which has its primary location at 3809 E. 82nd St., owed almost $2.5 million to PNC when it initially filed for bankruptcy.
Redman said the payments to PNC thus far have come from sales, not new capital. The company has been working with a consultant to refinance its debts.