The Clearwater Crossing building that housed Hofmeister Personal Jewelers Inc. for 24 years before the retailer closed earlier this year is expected to be sold at foreclosure sale in the next few months, according to a court agreement filed Wednesday.
The sale is intended to resolve a lawsuit filed in May by Wells Fargo Bank that accused Hofmeister of defaulting on a $2.3 million mortgage on the building.
The bank said Hofmeister failed to make a monthly mortgage payment of $21,004 that was due on March 1 and missed further payments on April 1 and May 1.
The suit was filed against the retail business, its affiliates and co-owner Carter Hofmeister.
The store closed shortly after the lawsuit was filed.
Gary Hofmeister, Carter's father, founded the jewelry business in 1973 in downtown Indianapolis. The retailer later moved to the basement of Glendale Mall and, in 1992, to the freestanding location at 3809 E. 82nd St. in Clearwater Crossing.
In the latest court filing, both sides agreed that a sale of the property to satisfy the debt was the best course of action. The agreement is awaiting the approval of U.S. District Court Judge Larry McKinney.
According to court papers, Hofmeister now owes nearly $2.5 million to the lender to pay off the mortgage balance and additional interest and fees. That debt will rise by about $725 daily until the property is sold.
A foreclosure sale has yet to be scheduled, but attorneys for both sides estimated it would take place within three months after the judge approves the agreement.
The property includes a 6,863-square-foot retail building that was constructed in 1992 and 184 parking spaces on two parcels of land with a combined acreage of 1.1 acres.
If the sale does not bring in enough money to cover the debt, the bank could hold Hofmeister responsible for paying off the remainder.
The property had a 2015 assessed value of almost $1.2 million. Median per-square-foot retail property prices in the area would place the value of the building at close to $2.6 million.
The court case marked the latest legal problem for the retailer, which already was trying to recover from a bankruptcy it filed in 2011.
Hofmeister Personal Jewelers filed for Chapter 11 reorganization in April 2011, listing assets of nearly $3.8 million and liabilities of $5.4 million.
Carter owns about 85 percent of the business and managed operations, according to court papers. He could not be reached for comment Wednesday.
After Hofmeister’s closure, Jewel Box Jewelers in Zionsville acquired some the store’s equipment, hired two of its jewelers and agreed to pick up Hofmeister’s repair business.
The retail jewelry industry has been struggling since the Great Recession took a toll on discretionary spending. Jewelry stores also are facing growing competition from online retailers.
According to data from the Jewelers Board of Trade published by National Jeweler, the number of companies exiting the jewelry industry has been climbing.
The industry saw 442 jewelers, wholesalers and manufacturers in the United States and Canada cease operations in the second quarter, up from 335 in the first quarter and more than double the number of closures seen in the second quarter of 2015.
In the first six months of 2016, 577 jewelers decided to close, a 55 percent increase over the first two quarters of 2015.