Court releases assets of ex-Fabrikant owners

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Court releases assets of ex-Fabrikant owners

October 27, 2008

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New York—Plaintiffs in the case against bankrupt diamond company M. Fabrikant and Sons withdrew their request to freeze the assets of the company's former owners, National Jeweler has learned.

The withdrawal, filed last week in the U.S. Bankruptcy Court for the Southern District of New York, reverses the June 18 order that authorized U.S. marshals to take all necessary steps to seize the assets of members of the Fortgang family, the ex-owners of Fabrikant, and subsequent orders modifying the original ruling.

The court papers go on to state that the "plaintiff shall promptly serve a copy of this order on each financial institution at which any of the Fortgangs hold an account that is subject to the June 18 orders and/or the amended orders, and on other persons or entities whom plaintiff notified of the June 18 orders and/or the amended orders."

Court papers further order that the plaintiffs, a group composed of Fabrikant lenders and creditors whose original complaint claimed the Fortgangs diverted funds to affiliate companies before filing for Chapter 11 bankruptcy protection, file an amended complaint in the case by Oct. 29.

The filing is just the latest in a series of twists and turns in the case that began back in June, when the judge originally signed the order giving U.S. marshals the right, if need be, to forcibly seize assets of Fortgang family members Charles, Matthew, Susan, Marjorie and Theresa Fortgang.

Through their attorneys, the Fortgangs battled back in court and won the right to a hearing on the seizure of the assets and were also granted monthly personal allowances in the interim.

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