In Bankruptcy News, celebrity bankruptcies

For decades, Schubach Jewelry has been a staple in Utah’s jewelry business. Long before you had a friend in the diamond business, before he went to Jared, or even before every kiss began with “K,” there was Schubach Jewelry. After this holiday season, Schubach will likely be no more. Schubach’s parent company, Samuels Jewelers, filed Chapter 11 bankruptcy last August in Delaware. The news didn’t travel very fast to Utah and it wasn’t until signs began appearing outside Schubach outlets announcing “STORE CLOSING, EVERYTHING MUST GO” that the news really got out.

Schubach’s parent, Samuels, can trace its roots to a regional jewelry business founded in 1891, whose name appears to have been lost to antiquity. In the 1950s, Barry’s Jewelers, a chain in California was formed and eventually bought that chain. When the 1970s and 1980s shopping mall explosion occurred, Barry’s went on a buying spree, acquiring stores from Zales and others, including Schubach’s. These companies often operated under their original names, but were owned by Samuels. In the 1990s Samuels started to experience pressure from discount operations such as The Shane Company. As the years went on that pressure intensified as online retail became the new wave of buying. Samuels Jewelers has actually filed Chapter 11 four times, in 1992, 1997 and 2003, as well as the current filing.

Samuels’s filing cites competition from discount and online retailers, changing customer tastes and old inventory as reasons for its current demise.

In addition to the marketing woes that Samuels has faced, its own parent company, an Indian firm  Gitanjali Gems Ltd., is under investigation by the Indian Central Bureau of Investigation (the equivalent of the Federal Bureau of Investigation in the United States) for, among other things, bank fraud. While Samuels Jewelers and all of its companies, including Schubach, have not been implicated in this investigation, Gitanjali is no longer operating and that has left Schubach without a parent company and subject to a possible takeover under Indian law as Gitanjali is dismembered.

Samuels’s bankruptcy filing says that it operates 120 stores under various names, Schubach being one, in 23 states. Though the bankruptcy has been pending for nearly four months, no plan of reorganization has yet been filed. At least part of the overall strategy appears to be to close the Schubach stores in Utah.

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