Case Study

Zale/Gordon Jewelry

CLIENT: Unsecured Creditors of Gordon Jewelry

Gordian Group advised the creditors committee of Gordon Jewelry in connection with the Zale bankruptcy.

Business Profiles


In 1989, Zale purchased Gordon Jewelry, the nation’s second largest jewelry retailer, 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. As operating results at Zale and Gordon Jewelry deteriorated significantly, and the companies were no longer able to meet their substantial debt service requirements, certain Zale bondholders filed an involuntary bankruptcy petition against the Company. Gordon Jewelry’s unsecured creditors opposed the bankruptcy process as originally contemplated and sought a separate reorganization for Gordon Jewelry.


Gordian Group was engaged by Gordon Jewelry’s unsecured creditors to advise with respect to preserving the flexibility for Gordon Jewelry to reorganize independently from the other Zale entities. Gordian Group was able to successfully overturn Zale’s exclusivity with respect to filing its POR, develop a controversial "stand-alone" plan, debunk the debtor’s original internal POR, which Gordon Jewelry’s creditors found objectionable and negotiate a consensual POR. Gordian was able to effectively argue fraudulent conveyance to thwart Zale’s efforts to implement a DIP financing that would have harmed Gordon Jewelry creditors as well as to secure an alternative unique "exit" financing vehicle that would have allowed Gordon Jewelry to exit bankruptcy independent of Zale.


As a result of Gordian’s ability to prevent Gordon Jewelry from being powerlessly assimilated into the Zale collective at the outset, and burdened with the DIP-related obligations without any benefit, the Gordon Jewelry creditors were able to obtain a significantly higher recovery. Gordian Group’s strategizing, testimony at the seminal DIP hearing and negotiating tenacity gave rise to a positive result for its clients in a distressed and complex situation.