The encyclopedia · Finance & Accounting · Financial decision · 1922–2009
Fortunoff sold New Yorkers jewelry for 86 years — then two bankruptcies ended it
Fortunoff was a New York jewelry and furniture institution for 86 years — it filed Chapter 11 twice in 12 months, then liquidated every store.
Fortunoff · 2008-02-04
What happened
Fortunoff was founded in 1922 by Max and Clara Fortunoff as a home and jewelry retailer in Brooklyn, New York. Over eight decades it became a New York institution — known for fine jewelry and outdoor furniture sold from a massive flagship store in Westbury, Long Island, and locations across the New York metropolitan area. By 2005, the family sold a 75% interest to private equity firm Trimaran Capital Partners and the Kier Group.
In February 2008, Fortunoff filed for Chapter 11 bankruptcy. Simultaneously, it accepted a $100 million sale to NRDC Equity Partners, parent of Lord & Taylor, which included roughly $60 million of Fortunoff's debt. NRDC promised an additional $100 million in capital to revive the chain. The deal closed in March 2008, and Fortunoff exited bankruptcy — but the promised capital infusion never came.
Without the capital, Fortunoff could not recover. A weak 2008 holiday season and reduced borrowing capacity forced the company back into Chapter 11 on February 5, 2009 — exactly 12 months after the first filing. By February 25, 2009, all Fortunoff stores began liquidating. The chain that had sold New Yorkers their engagement rings and patio furniture for 86 years was gone by June. Fortunoff's descendants later reacquired the brand and relaunched it online.
Why it happened
- Selling to NRDC Equity Partners was meant to save Fortunoff, but the promised $100M capital infusion never arrived — the company was stranded in bankruptcy with no rescue.
- Private equity bought Fortunoff in 2005 and loaded it with debt; by the time NRDC bought it out of Ch.11, the chain had already been weakened by years of servicing that debt.
- Two Chapter 11 filings in 12 months showed that the first restructuring did not address the underlying problem — declining mall traffic and competition from online jewelry retailers.
- NRDC's failure to invest the promised capital was fatal — Fortunoff had already sold itself expecting that money, and had no plan B when it didn't come.
The lesson
Promised capital is not delivered cash. Fortunoff sold itself expecting $100M that never came — the second Chapter 11 was the bill coming due.
Sources
spotted an error? The club wants to know.
More like this
Shane Company filed Chapter 11 in 2009 — and repaid every dollar
Friedman's sold fine jewelry for 85 years — two bankruptcies in three years liquidated it
Charles & Colvard made moissanite famous — then cheaper lab stones destroyed it
Somewhere, someone solved the problem this company failed at. 2nd Opinion →
Comments · 0
Sign in to join the comments.