Martin Ross files for protection from creditors

by eyetee | August 8, 2014 3:49 pm

[1]This story was updated Aug. 15.

One of Canada’s last remaining large-scale manufacturers has filed for protection from creditors while it restructures its business.

Sources tell Jewellery Business that Martin Ross Group has received approval under Companies’ Creditors Arrangement Act (CCAA). The act allows a company an opportunity to avoid bankruptcy and for creditors to receive some form of payment for amounts owed to them while it reworks its business. To be eligible to use the act, a corporation must have amounts owing to creditors in excess of $5 million.

News travelled quickly throughout the Toronto jewellery scene, with many in disbelief.

J. David Ritter, president of Canadian Jewellers Association (CJA), said he received numerous calls at his office asking if the rumours were true.

“It’s a very sad day for the jewellery industry in Canada,” said Ritter, speaking to Jewellery Business from the Canadian Jewellery Group golf tournament where the news was the major topic of discussion.

“It’s a terrible situation for all the employees and sales reps, especially at this time of year when this is the main selling season. We feel very badly for them, as well as for the company itself and for the industry.”

Martin Ross chief executive officer (CEO) Allen Shechtman and Cameron Gillies, its president and chief operations officer (COO), could not be reached for comment.

Giovanni Vaccaro, owner of Beverly Hills Jewellers in Richmond Hill, Ont., said he received a call from one of his suppliers in Israel who had heard the news from a colleague who does business with Martin Ross.

At this point, he says his thoughts are with the company’s sales reps and its hundred or so employees.

“These are Canadian families that will be affected,” says Vaccaro, one of the two large-scale manufacturers left in Canada. “I will do my best to hire as many Martin Ross employees as I can. The unfortunate part is, where are they going to turn to? I know of one sales rep that recently purchased a new home.”

John Minister, owner of Corona Jewellery Co., another Canadian manufacturer based in Toronto, agrees the news is a big blow the local industry. “The main concern is the loss of so many jobs by the all people who are affected by this,” he says. “It’s a sad day for the jewellery industry in Canada, as Libman & Co. [which is owned by Martin Ross] has always been known as one of the highest quality manufacturers in Canada.”

Ritter says the news raises the possibility of another company acquiring Martin Ross.

“Hopefully in the next few days, some of those questions will be answered and we’ll be able to look at the situation in a different and more positive light,” he added. “However, this is all speculation at this point.”

Minister echoed the sentiment. “There is always the hope someone will step in and continue to run the business,” he said.

David Barthau, owner of Barthau Jewellers in Stouffville, Ont., carries Martin Ross’s Libman and Canadian Rocks lines, as well as loose Victor diamonds. He hadn’t heard the news when contacted by Jewellery Business.

“That’s surprising,” Barthau said. “I hate to see another Canadian company running into problems. There’s very little manufacturing being done here. I’m sorry to see this happen. It’s not good for the industry as a whole. The industry has changed dramatically in the last five years with global trading.”

Vaccaro says the fallout could include inventory flooding the market, potentially at bargain-basement prices, which will definitely affect his business.

“It will be a rough ride for a while,” he says. “It’s the same situation as when A & A Jewellers went under. People will want the bargain prices and you can’t blame them.”

Minister says the highly competitive bridal market in Canada is sure to change, particularly as Martin Ross clients look to pick up other lines. “Thankfully, Corona enjoys a strong and loyal dealer base and we always strive to continue in our efforts of make it stronger,” he explains. “New dealers would only be added when it is to the benefit of all parties, including our existing dealer network.”

The last several years had seen Martin Ross grow substantially. In 2010, the company acquired Libman & Co., another Canadian manufacturer that would have celebrated its 80th anniversary this year. Libman had earlier filed court documents indicating it was insolvent.

Two years later, Martin Ross was named one of two manufacturers of the Forevermark diamond brand in Canada. The deal called for Libman to manufacture the exclusive lines at its Toronto facility in partnership with Crossworks Manufacturing, an HRA Group company, which would cut and polish the diamonds at its factories in Sudbury, Ont., and Yellowknife.

Later that year, Martin Ross acquired HRA’s independent jewellery division, which included the Canadian Rocks brand.

HRA issued a press release saying it is now resuming its role as the exclusive supplier of Canadian Rocks diamonds and diamond jewellery.

HRA Group executive Dylan Dix said also production will continue on Forevermark jewellery.

“We have several other strong jewellery manufacturers that have been involved in manufacturing Forevermark jewellery since the program’s inception in Canada and will continue to do so,” Dix said. “Our retailers will continue to have the selection of loose Forevermark diamonds from Crossworks Manufacturing, as well as Forevermark diamond jewellery through these manufacturers, A. Link and M.K. Diamonds. We are excited to provide the Forevermark brand into the 2014 season with these two jewellery manufacturers.”

In May, Martin Ross announced it would no longer distribute product lines manufactured outside the Great White North, concentrating instead on its ‘Made in Canada’ brands.

 

 

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