By Michelle Graff
New York-based jewelry company A. Jaffe, a maker of diamond engagement rings and the diamond-set map jewelry seen here, is set to be sold to Paramount Jewels LLC for $5.2 million.
New York—Paramount Jewels LLC has placed the winning bid for A. Jaffe, the Nirav Modi-owned company that filed for bankruptcy earlier this year.

In a deal finalized late Friday, Paramount Jewels, an affiliate of Paramount Gems and Parag Diamonds Inc., agreed to buy the diamond jewelry company’s brand and business for $5.2 million.

This includes all of A. Jaffe’s core assets: its name, intellectual property, design patents, accounts receivable and inventory; all the assets, the companies said in a statement, that are “needed for A. Jaffe to continue as the successful brand that it is recognized as in the industry and to consumers.”

Jewelex Diamonds, GBC, Diamonds International and Amipi Inc. bought some non-core assets, including inventory, for a total of $1.2 million. Additional non-core assets will be sold at a later date.

According to a statement from the companies, A. Jaffe employees will stay on, with Sumay Bhansali as CEO and Sam Sandberg as chairman, and the company will operate as its own entity independent of Paramount Jewels.

Parag Jain, manager of Paramount Gems/Parag Diamonds, said A. Jaffe has always been, “a leader and a pioneer in the jewelry industry” and his company is not looking to change that.

“There will be no restructuring,” he said. “A. Jaffe will continue to operate with the utmost quality, customer service and its outstanding product offering. The company will be stronger than ever.”

The $5.2 million purchase price is about $3 million less than what Paramount Gems/Parag agreed to pay for A. Jaffe when the first auction for the company was conducted in May, though that sale included additional assets and inventory that were sold off separately this time. The May sale was halted by the judge and ultimately withdrawn by A. Jaffe’s attorney. 

A motion has been filed with U.S. Bankruptcy Court in New York City to approve the sale. It is scheduled to be heard July 25.

A. Jaffe filed for Chapter 11 bankruptcy protection in New York in February shortly after news broke that Modi, who ultimately owns the company, was wanted for bilking state-run Punjab National Bank out of nearly $2 billion.

Filing along with A. Jaffe were the two other U.S.-based companies connected to Modi, Firestar Diamond Inc. and Fantasy Inc.; the companies went Chapter 11 in order to distance themselves from Modi and the scandal erupting in India and because their source of supply—Modi’s factories in India—shut down in the wake of the scandal.

The inventory of both Firestar and Fantasy remain up for sale, with Unique Designs filing the highest bid for the latter’s inventory so far, court papers show.

In April, the bankruptcy court appointed an independent examiner to investigate Modi’s ties to all three companies—A. Jaffe, Firestar and Fantasy—and whether any employees in the United States were involved.

That investigation continues, though court papers show that as part of the sale, Paramount Jewels is distancing itself from any issues that might arise from the examiner’s findings.

The proposed sale order filed Friday states: “This order shall not transfer any claims or causes of action to the purchaser against (1) the debtors’ employees, affiliates, direct or in direct interest holders, or insiders … that the examiner determines in his report to have likely participated in the alleged fraud involving Nirav Modi and certain persons or entities affiliated with Nirav Modi that is being investigated by the examiner … and (2) any other person or entity that examiner determines in his report to have likely participated in the alleged Modi fraud or acted in bad faith in its dealings with the debtors.”

Editor’s note: This story was updated post-publication to include the purchase price for the non-core assets ($1.2 million) and to provide clarity on what the $5.2 million paid for A. Jaffe includes.

Get the Daily News >
National Jeweler

Fine Jewelry Industry News

Since 1906, National Jeweler has been the must-read news source for smart jewelry professionals--jewelry retailers, designers, buyers, manufacturers, and suppliers. From market analysis to emerging jewelry trends, we cover the important industry topics vital to the everyday success of jewelry professionals worldwide. National Jeweler delivers the most urgent jewelry news necessary for running your day-to-day jewelry business here, and via our daily e-newsletter, website and other specialty publications, such as "The State of the Majors." National Jeweler is published by Jewelers of America, the leading nonprofit jewelry association in the United States.