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N.J. jeweler, emerald dealer files Chapter 11

By Michelle Graff
February 05, 2010

Newark, N.J--Citing the down economy, Arthur Groom, a New Jersey retailer and developer of an emerald treatment, has become the latest victim of the financial crisis, filing for Chapter 11 bankruptcy protection on Wednesday.

Arthur Groom and Co. has been in business for approximately 35 years in Ridgewood, N.J., and the company's founder and namesake also developed the ExCel Process, a proprietary treatment process that enhances the clarity of emeralds. Groom sells these clarity-enhanced stones through Eternity Natural Emeralds, a division of Arthur Groom and Co.

According to documents filed in U.S. Bankruptcy Court for the District of New Jersey in Newark, N.J., Groom sunk a significant amount of money into developing the emerald-enhancing process and leasing equipment for the procedure.

But like other jewelry retailers, Groom's sales took a major hit during the economic downturn, falling from about $4.1 million for the fiscal year ended July 31, 2007 to about $3.2 million for the fiscal year ended July 31, 2009.

Unable to make payments due under the equipment lease agreements or to negotiate a payment deal with all leasing company creditors, the retailer was forced to file Chapter 11.

At the time of filing, court papers show that Groom's estimated assets totaled between $1 million and $10 million but his liabilities were estimated at between $10 million and $50 million.

This includes $2.23 million alone owed to first priority lender TD Bank NA, as well as the amounts owed to a long list of unsecured creditors, including many that claim a security interest in the emerald enhancing equipment.

Groom's creditors total between 50 and 99 and his top three unsecured creditors are National City Commercial Capital, owed $1.25 million; Lawrence Erlbaum, owed $962,000 and Bank of the West, owed $933,932.

Groom, however, expects to reorganize and emerge from Chapter 11, according to court papers.

The bankruptcy filing indicated that Groom recently signed an agreement with Jewelry Television (whose corporate name is America's Collectibles Network) to sell his enhanced emeralds on air. The network reaches million of viewers, with annual revenues of about $430 million and current annual emerald sales of about $3.1 million that the company hopes to increase.

"Debtor's financial difficulties were caused by the general downturn in the retail jewelry business and the expenditure of significant monies to perfect the emerald enhancing process," court papers state. "It is debtor's expectation that the recently entered into contract with the network will allow it to generate significant additional revenue and allow debtor to propose a plan of reorganization."
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