Creditors Force Zale To Bankruptcy Court

DALLAS

Zale Corp., the nation's largest jewelry retailer, was forced by several of its bondholders into involuntary bankruptcy yesterday.

"We had warned everybody, if the company didn't make its payments, that we were going to do this," said David Glatstein, president of Barre & Co., a Dallas investment company and one of the petitioners in the Chapter 11 filing. Creditors can file to force debtors into bankruptcy, where reorganization can be structured by the court.

On Monday, Irving, Texas-based Zale made a survival pitch, announcing an operational restructuring that included the freezing of all debt payments and the closure of 400 of its 2,000 jewelry stores nationwide. Among the retailer's debts is a $52 million interest payment owed to bondholders since Dec. 2.

Glatstein said Zale has too many bondholders for the company to deal with out of court. "Everybody's on the same playing field (in bankruptcy court)," he said.

Zale has seven jewelery stores in the Seattle area, in downtown Seattle and the Northgate, Southcenter, Sea-Tac, Tacoma, Everett and Alderwood malls. There are 18 in the state, said Ann Reynolds, manager of the Downtown Zale's Jewelers store.