The Shane Co. filed for Chapter 11 bankruptcy protection Monday, and the voice of the company's well-known radio commercials is its largest unsecured creditor.
The filing was made in U.S. Bankruptcy Court in Denver. The Centennial, Colo.-based jeweler, which has a store in Brentwood, Mo., listed assets and liabilities of between $100 million and $500 million on documents filed with the court.
Shane Co. owes $26 million to its 20 largest unsecured creditors alone, according to a filing with the court. Dison Gems of New York, which is owed $4.7 million, is listed as the companyâ€™s largest unsecured creditor.
But a filing made late in the day revealed that it's Tom Shane â€” the president, CEO and chairman in addition to its commercial pitchman â€” who is owed the most. The CEO has loaned Shane Co. about $20 million during the past few years, according to the document.
Tom Shane owns about a 70 percent stake in Shane Co. The rest is owned by trusts formed for the benefit of his children.
Denver attorney Caroline Fuller, of Fairfield and Woods PC, who represents Shane Co., said the current economy and the state of the luxury goods retail market put the diamond merchant in a cash crunch. She said the company hoped to emerge from Chapter 11 by yearâ€™s end.
"The severity of this past holiday season dramatically impacted existing liquidity requiring the company to seek this bankruptcy protection," Tom Shane said in a written statement. "I am confident that this action will guarantee that our customers will continue to enjoy the top-notch service, expansive selection, and unbeatable prices that they have enjoyed since the days of my grandfather."
Founded in 1971, Shane Co. currently operates 23 stores in 14 states, including Arizona, Colorado, California, Georgia and Florida. In its advertising and on its website, the company calls itself â€œyour friend in the diamond business.â€ It says that customers pay â€œno middleman markupâ€ because the company buys its diamonds and gems directly from cutters in Belgium, Israel, Thailand and India.
Tom Shane is the third generation in the Shane family to be involved in the jewelry business.
The company employs 542 people.
The board and shareholders of Shane Co. decided on Jan. 7 to authorize the Chapter 11 filing, according to a document filed with the court.
Shane Co. has about 6,000 creditors, including about 750 secured lenders, vendors, consignment creditors and landlords, and about 4,600 customers. The company filed a motion with the bankruptcy court seeking approval to:
process credit card payments
honor warranties, guarantees, upgrades and gift cards
continue its layaway program
Shane Co. said about 70 percent of the purchases in its stores or online are made with credit or debit cards. The company said it pays, on average, $243,000 a month in processing and related fees.
Shane Co. offers a lifetime warranty on most of its merchandise -- pearls are one exception -- and provides a 60-day window during which customers can exchange merchandise. The companyâ€™s upgrade program allows customers to return any jewelry made of gold or platinum and set with diamonds, rubies or sapphires and get credit for the price paid toward another piece of jewelry. The new jewelry must be valued at double the purchase price of the original piece.
Shane Co. also said it had outstanding obligations as of Dec. 27 of $260,000 under its gift card program. The gift cards donâ€™t have an expiration date. The retailer also said it has layaway deposits amounting to $3 million for 4,300 customers.