US arm pleads debts of £79.2m versus assets of £33.8m.
Gems TV USA has filed for bankruptcy protection a month after the company announced it would wind down its operations in the US ending what it called an “operational cash burn”.
In court the company applied for Chapter 11 bankruptcy protection and listed assets of US$51.2 million and debts of US$120 million (£33.8 million and £79.2 million). It claimed that rising gold prices had impacted margins so severely that it had been left struggling to maintain a sufficient level of profitability to maintain operations in the US and satisfy lenders.
Gems TV president and director Diane Schneiderjohn added: “The company’s margins and profitability have been under constant pressure from this extremely challenging and unpredictable economic environment.”
When Gems TV Holdings announced the intended closure of its US operations it also revealed that it planned to keep a stake in the US market by buying a share of rival Jewelry Television. It is thought that filing for bankruptcy will not affect its bid.
Gems TV USA is also being sued by DirecTV for a reported US$25 million (£16.5 million) in damages for an alleged breach of an affiliation agreement. In a statement, Gems TV Holdings said: “Gems USA believes that the DirecTV claims are without merit and intends to contest them.”