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Ultra Stores files Chapter 11

By Michelle Graff
April 09, 2009

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Ultra Stores Inc., which filed for Chapter 11 bankruptcy protection, will make an effort to continue to operate its stores as it restructures and tries to emerge from bankruptcy.

New York--Ultra Stores Inc., which operates Ultra Diamonds and the fine-jewelry departments in several off-price department stores, filed for Chapter 11 bankruptcy protection on Thursday.

According to documents filed in U.S. Bankruptcy Court for the Southern District of New York in Manhattan, Ultra's board of directors held a special meeting on March 25 during which board members discussed outstanding debt positions with Bank of America, Crystal Capital and various trade creditors and the status of its ability to gain capital infusion from several banks and other sources.

After hearing the report, the board ultimately determined that it was "desirable and in the best interests of the company, its creditors, its shareholders and other interested parties" to file Chapter 11, court papers said.

Ultra is looking to operate as a debtor-in-possession during the Chapter 11 proceedings, which cover Ultra Stores Inc., Ultra Stores Puerto Rico Inc. and Ultra Stores USVI Inc. This means that the retailer will make an effort to continue to operate its stores as it restructures and tries to emerge from bankruptcy.

In the Chapter 11 petition, the company is listed as being in debt to between 100 and 199 creditors, with $10 million to $50 million in assets but also $10 million to $50 million in liabilities.

According to information supplied by the company, Ultra operates in a total of 181 locations. It runs 124 stores under the brands Ultra Diamonds and Premier Fine Jewelry and operates the licensed departments in 31 Burlington Coat Factory stores and 26 Filene's Basement department stores.

The Chicago-based chain ranked seventh among the largest North American jewelry retailers by store count, according to National Jeweler's "Top 50" ranking for 2008, which was published last May as part of the magazine's annual State of the Majors supplement. Since that list came out, two larger chains, Friedman's and Whitehall Jewelers, have gone bankrupt and have liquidated stores.

Ultra rang up $165 million in jewelry and watch sales in 2007, making it No. 33 on the "$100 Million Supersellers," another State of the Majors list published in 2008.
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