Kwiat Enterprises, LLC, along with two partners, has purchased the assets of bankrupt estate jeweler Fred Leighton in a $25.8 million deal that aligns two brand names that executives believe will fit together, hand in glove, at the high end of the jewelry market.

 

The transaction, which closed on Tuesday, will have Kwiat and asset management firm Och-Ziff Capital Management Group LLC-partnering as FL Acquisitions LLC--taking control of the Fred Leighton business, including its two boutiques-one in New York City and the other in Las Vegas-as well as its trademarks and intellectual property. Kwiat, Och-Ziff and FOF Inventory Holding, which consists of four estate and jewelry dealers-including Windsor Jewelers, Robert Sadian and Mark Emanuel of European Arts and Antiques, Sima Ghadamian of Sima G. Ltd., and Moonbeam Consulting, whose principal is the company's original founder Fred Leighton-will assume control of the company's inventory.

 

Kwiat will run the newly acquired retail stores under the existing Fred Leighton nameplate.

 

The parallels between the two brands as well as the distinct differences in each one's jewelry designs, made the deal very attractive to Kwiat, said one company executive.

 

"Fred Leighton is a phenomenal brand name, with an extraordinary association with antique and estate jewelry in the U.S.," Greg Kwiat, who will be chief executive officer of Fred Leighton, told National Jeweler. "We had an opportunity to take over the company, and I think it's a very complementary acquisition for Kwiat."

 

Hollywood stars are frequently spotted wearing both brands on the red carpet, but while Fred Leighton is the go-to jeweler for blockbuster estate jewelry, the 102-year-old Kwiat is known for its dramatic contemporary and classic diamond jewelry. In addition, both companies have retail stores on Madison Avenue in New York City and in Las Vegas.

 

For Kwiat, though, the heart of the business is its strong wholesale partnerships with guild jeweler and high-end department stores, and Greg Kwiat says that he hopes to expand Fred Leighton's U.S. retail presence and bolster its wholesale presence in fine department stores and independent guild jewelers.

 

Fred Leighton filed for Chapter 11 bankruptcy protection in April 2008, a move that had owner and well-known jewelry collector Ralph Esmerian simultaneously halting a Christie's auction of millions of dollars of the brand's antique gems. According to various news sources, Esmerian, who filed the bankruptcy petition, bought Fred Leighton for $100 million in 2006 using a $178 million loan from Merrill Lynch and Co., which wanted the Christie's auction to go ahead so that it could recoup some of its outstanding debt claims.

 

The complex bankruptcy case has lingered in court, with Esmerian relinquishing control of the company to a restructuring officer in January 2009. On Nov. 2, a bankruptcy judge signed an order that authorized the sale to Kwiat and the other two companies of substantially all of Fred Leighton's assets, free and clear of all liens, claims, interests and encumbrances. The bankrupt company's main creditor, Merrill Lynch, stands first in line for the proceeds of the sale, according to court records filed in the U.S. Bankruptcy Court's Southern District in New York.

 

Triton Equity Partners, headed by Robert Pressman, former chairman of Barneys New York, acted as adviser to and co-investor with Kwiat and Och-Ziff on the transaction.

 

As those details are sorted out in bankruptcy court, the company's new owners are creating a fresh start, unencumbered by the old debts.

 

"The Fred Leighton team is very strong and the core of the team is remaining," Kwiat said.  The company employs about 15 people, and over the past two years, since the bankruptcy filing, the group has worked hard to keep the operation running smoothly, he said.

 

Fred Leighton himself gave Kwiat some encouraging words in a press release issued by the company.

 

"The Fred Leighton Madison Avenue flagship is a New York landmark," Leighton said. "It is a bastion for the rarest and most collectible estate jewelry from every period of design history-from Victorian to Belle Epoch to Art Deco. With a 100-year history of their own, the Kwiat family has embraced this, and I am confident that under their guardianship, Fred Leighton will continue to be the preeminent antique jeweler in the world."

 

Asked about the risks of buying a high-end jewelry company in the midst of a recession in which several high-end jewelers have filed for bankruptcy, Kwiat said he is confident the two brands can hold their own in a tough market.

 

"No question that we're in a difficult period," he said. "[But] the high end of the jewelry market is very resilient. The pieces that we sell hold long-term value very well. Our customers understand that this jewelry holds long-term value and that these are investments of passion that can be family heirlooms."