Gordon Jewelry Corporation

In 1989, Zale Corporation purchased Gordon in an acquisition financed largely with debt. Zale itself had earlier been taken private through a leveraged transaction. The combined companies' sales represented approximately 10% of the U.S. fine jewelry market.

By late 1991, operating results at Zale and Gordon had significantly deteriorated due to the adverse economic climate, and the companies were no longer able to meet their substantial debt service requirements. In December 1991, certain bondholders filed an involuntary bankruptcy petition, to which Zale acquiesced in January 1992.

In February 1992, the Official Committee of Unsecured Creditors of Gordon Jewelry retained Gordian Group for assistance in:

• Preserving the flexibility for Gordon Jewelry to reorganize independently from the other Zale entities, in part, through a difficult series of negotiations and court hearings that altered DIP financing arrangements which would otherwise have inextricably bound Gordon to Zale's reorganization

• Developing a controversial "stand alone" plan

• Negotiating a consensual plan of reorganization

• Securing "exit" financing in the form of a receivables securitization, a gold loan and a working capital line of credit

As a result of Gordian Group's ability to prevent Gordon from being powerlessly assimilated into the Zale collective, the Gordon creditors were able to obtain a significantly higher recovery.