Coping with lawsuits and at least one published report of financial problems, M. Fabrikant & Sons, New York, announced that it has executed an agreement with its domestic lenders.
Details of the agreement were not released, but it was greeted with sighs of relief by the jewelry trade, since U.S. banks hold a major chunk of Fabrikant’s debt, sources say. However, some knowledgeable observers believe Fabrikant’s situation is still fluid. They noted that (at press time) the company had not made a deal with its trade creditors or foreign banks, although Fabrikant said in a statement that it’s “in discussions with its foreign lenders” to obtain a deal similar to the one with its domestic banks.
“The waters have been calmed but they are not out of the woods yet,” noted one bank source. “It’s a very difficult situation. All the banks are just hoping that everyone keeps their calm and that this thing does not unravel, because that would lead to a disaster. But eventually something has to give, and Fabrikant will probably be a different company in the future.”
Company officials declined comment on Fabrikant’s current situation, saying they will release information “as soon as they can.” Fabrikant’s news release noted that it’s in “a worldwide review of [its] operations.” Officials did dispute one report of financial problems that appeared in the Israeli newspaper Globes.
The situation is being watched closely by the trade. Fabrikant was established in 1895 and grew to become one of the biggest companies in the industry; its Israeli division, Fabrikant-Salant, is a Diamond Trading Company sightholder. It has more than 20 companies under its umbrella, and among its divisions or affiliated companies are Robert Lee Morris, The Simmons Jewelry Co. (a venture with rap mogul Russell Simmons), Suzy Fabrikant, and Brilliant Trading (in conjunction with Israeli magnate Lev Leviev).
The company’s current problems include two lawsuits by Indian companies, Blue Star and KP Sanghvi, both filed this summer. Blue Star claims Fabrikant owes it $5.6 million; KP Sanghvi, $1.9 million. In both filings, the companies allege that they were told that “because of dire financial circumstances, [Fabrikant] is unable to pay” its invoices. In a response, Fabrikant “denies that it ever described its financial circumstances as dire” and disputes the amounts owed.
In other company-related news, Tara Jewels, one of India’s largest jewelry manufacturers, recently purchased a 60 percent interest in a Fabrikant subsidiary, Fabrikant Leer, according to a report in India’s Business Standard. The new company will be called Fabrikant-Tara International and will be headed by Larry Weinman.
Fabrikant also announced that Matthew Fortgang is now the day-to-day chairman of the company, succeeding his father, Charles Fortgang, who is now chairman emeritus.