OTC Int'l files Chapter 11, seeks sale

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OTC Int'l files Chapter 11, seeks sale

May 14, 2008

New York—After filing for Chapter 11 bankruptcy protection last month, jewelry importer and wholesale company OTC International Ltd. is seeking to sell its assets in a hearing scheduled for May 20, bankruptcy court documents show.

According to documents filed in U.S. Bankruptcy Court for the Southern District of New York, New York-based OTC submitted its voluntary petition for Chapter 11 bankruptcy protection on April 3.

In court papers, OTC said that for the fiscal year ended Feb. 28, 2007, it generated gross revenues of approximately $97.5 million and generated net income of approximately $566,000. But the company's financial situation was taking a turn for the worse by November 2007, and for the fiscal year ended Feb. 28, 2008, the company generated gross revues of approximately $85 million and incurred net operating losses of about $15 million, court papers said.

The company is, according to court documents filed on May 8, seeking the court's approval to sell all of its assets to Dialuck Corp., a loose-diamond importer and jewelry manufacturer, which has offered to pay $23 million, plus the assumption of certain liabilities.

After receiving offers and inquiries from other companies and investment firms, Dialuck came back with the best offer for OTC and an agreement was drawn up on May 1, court papers said.

Now, OTC would like the court to set up a hearing on its motion to sell, which would pave the way for higher and better bid offers to flow in, if such offers exist, and would allow the company to hold an auction.

OTC imports and wholesales gold, silver, diamond, cameo and colored-stone jewelry to retail chains, major department stores, electronic retailers, discount chains and specialty stores.

Court documents show that the bulk of OTC's business is in gold and diamond jewelry (50 percent), followed by silver (28 percent), gold (21 percent) and cameo (1 percent.)

OTC sells the greatest percentage of merchandise to electronic retailers (38 percent), department stores (35 percent), retail jewelry chains (14 percent), mass merchandisers/discounters (12 percent) and specialty stores (1 percent).

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