Christian Bernard Files for Bankruptcy

Christian Bernard Stores Corp. filed for Chapter 7 bankruptcy the day after Christmas, citing falling sales and limited access to credit, court documents show.

According to a voluntary petition filed in the U.S. Bankruptcy Court for the District of New Jersey in Newark, N.J., Christian Bernard possesses estimated assets of $10 million to $50 million and also has on its books an estimated $10 million to $50 million in liabilities.

The chain, which is based in Secaucus, N.J., operates 15 stores in eight states, including Connecticut, Illinois, Maryland, Missouri, North Carolina, New York, Pennsylvania and Virginia as well as in Washington, D.C., according to National Jeweler's 2008 State of the Majors report. Christian Bernard is also listed as No. 38 on National Jeweler's Top 50 list, which ranks the largest jewelry chains in North America by store count.

In its petition, the chain estimates that funds will be available to pay its unsecured creditors, which number between 200 and 999 and include companies such as Dalumi Diamonds, Hearts On Fire and Leo Schachter Diamonds, according to court documents. The dollar amount owed to each creditor was not indicated in the list of creditors.

While Christian Bernard officially filed for bankruptcy on Dec. 26, court documents show the chain started making moves in that direction earlier in the month, when the board of directors took the first steps toward bankruptcy.

According to documents filed on Dec. 19, the corporation's board of directors resolved, among other actions, to retain a New York City-based law firm, Salans, for the purposes of filing for either Chapter 11 or Chapter 7 bankruptcy.

Chapter 11 bankruptcy protection frees a company from the threat of creditor's lawsuits while it reorganizes. By contrast, a Chapter 7 bankruptcy typically leads to liquidation, although a business in Chapter 7 can continue to operate under the direction of a court trustee and may be able to settle with creditors and not liquidate.

The board's decision to file for bankruptcy was spurred by a number of circumstances, including a "precipitous fall in consumer spending" that led to the corporation's retail shops "underperforming," and the fact that the company's existing lender "has apprised that it may not renew its current lines of credit with the corporation," court papers said.

With alternative sources of credit appearing to be unavailable and no liquidity with which to run the company's ongoing operations, the board decided that operations "appear to be unsustainable," court documents state.