Friedman's jewelry company emerges from bankruptcy

Published: Dec. 14, 2005 at 4:31 PM EST|Updated: Dec. 16, 2005 at 5:02 AM EST
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(Savannah, GA-AP) December 14, 2005 - Friedman's Incorporated has emerged from Chapter Eleven bankruptcy less than a year after filing.

The jewelry retailer based in Savannah announced Tuesday that its reorganization plan became effective December 9th. The company filed for bankruptcy January 14th.

The filing followed charges of fraud by the Securities and Exchange Commission and the company's later announcement that its audited financial statements for 2001 and 2002 were incorrect.

Friedman's settled the SEC charge in late November by agreeing to pay two million dollars to a fund aimed at preventing fraud.

The company also has replaced all its senior management.

Friedman's outstanding common stock was canceled as part of the court-approved reorganization plan approved by the US Bankruptcy Court in November. The cancellation eliminates any control over the company by those stockholders.

Court documents show that Friedman's has become a private company that is owned in part by Harbert Management Corporation, which invests in struggling companies.

The company said in a news release Tuesday that Friedman's was obligated with $149 million in secured debt upon emerging from Chapter Eleven.

The release says most of the debt has been eliminated or refinanced by CIT Group Incorporated, which approved Friedman's with $125 million in financing.

Earlier this month, Friedman's announced it would emerge from bankruptcy with 424 stores. The company plans to close 51 of those after the Christmas season.

Friedman's has four stores in Savannah and one in Garden City. It's not known whether any of the five stores will be among the closings.

Posted 11:31am by Bryce Mursch