Jeweler Ralph O. Esmerian, whose pieces have adorned celebrities and appeared in museums, asked a bankruptcy judge for permission to reorganize his New York-based company.
Esmerian, the former owner of vintage jeweler Fred Leighton, is fighting an effort by creditors to liquidate R. Esmerian Inc. in U.S. Bankruptcy Court in Manhattan. The jeweler today asked the court to convert that case to a voluntary reorganization under the U.S. Bankruptcy Code’s Chapter 11, which is typically used by companies that expect to cut debt and emerge from court protection.
“Its continued operation is critical to maximizing the value of its assets and the recovery to its creditors,” Esmerian said in court papers. He also asked U.S. Bankruptcy Judge Robert D. Drain to appoint an examiner to oversee the bankruptcy case.
In May, creditors including Stewardship Credit Arbitrage Fund LLC, Stewardship Credit Arbitrage Fund Ltd. and Northlight Fund LP filed an involuntary Chapter 7 bankruptcy petition against R. Esmerian Inc., claiming they are owed a total of $40 million.
Creditor attorney Sean C. Southard didn’t immediately return a call for comment.
Under Chapter 7, the court appoints a trustee who takes over a company and liquidates its assets. When creditors file an involuntary bankruptcy case against a company, the business has the right to challenge the petition.
U.S. retailers’ sales at stores open at least a year fell 1.6 percent in the year ended Jan. 30, after dropping 1.3 percent a year earlier, according to the International Council of Shopping Centers, a New York-based trade group that tracks more than 30 chains, excluding Wal-Mart Stores Inc. Sales at luxury retailers dropped 9.1 percent and 8.3 percent in those periods, respectively, the ICSC said.
Esmerian previously filed for bankruptcy in April 2008 on behalf of the retail jeweler he owned, Fred Leighton Inc., in an effort to block Merrill Lynch & Co. from auctioning his family’s jewels to pay off a $178 million loan. Fred Leighton Holding Inc. liquidated inventory and had its Chapter 11 reorganization plan confirmed in November.
Esmerian no longer owns the company, Merrill attorney Howard R. Hawkins Jr., with the law firm Cadwalader Wickersham & Taft, said in an e-mail.
Fred Leighton jewelry has been worn by actress Nicole Kidman and other stars attending the Oscars and other celebrity events, according to the company’s website.
Esmerian, the fourth-generation leader of the family business, became known for selling colored gemstones and rare vintage brooches and necklaces by Cartier and Tiffany & Co. He stocked the shelves at retailers around the U.S., including Neiman Marcus and Van Cleef & Arpels. He’s also chairman emeritus of New York’s American Folk Art Museum.
The case is In re R. Esmerian Inc., 10-12719, U.S. Bankruptcy Court, Southern District of New York (Manhattan).