One of the top U.S. makers of lab-grown diamonds, WD Lab Grown Diamonds files for bankruptcyin Delaware bankruptcy court on Wednesday. The filing occurs at a time when the cost of natural diamonds has significantly decreased.
In its first statement, the Maryland-based company that makes fake gems said that it owed a lot of money($44.8 million) and had assets worth $3.06 million. It is thought to have between 100 and 199 debtors.
According to court documents, M7D Corporation, doing businessas WD Lab Grown Diamonds, has recently filed a Chapter 7 bankruptcy process.
Chapter 7 allows businesses to liquidate and terminate their enterprise, and to appoint a trustee to convert the firm’s assets into cash for distribution among creditors.
According to the company's filing with the District of Delaware US Bankruptcy Court, WD Lab Grown Diamonds stated total liabilities of $44.8 million. On Wednesday, a statement like this was released.
Huron Capital, a private equity group, owns this Washington, DC-based corporation, which has revealed that it has between 100 and 199 creditors and assets valued at $3.1 million. According to the company's filing, there would be no money left over after administrative costs were paid for unsecured creditors.
The company's selected bankruptcy structure, Chapter 7, entails the sale of assets to pay off debts and denotes the end of corporate activities. In addition to multiple unsecured creditors, WD Lab Grown Diamonds listed one secured creditor, Tree Line Direct Lending, a San Francisco-based company.
WD Lab Grown Diamonds was founded by diamondindustry expert Clive Hill in 2008 as Washington Diamond Corp. WD was bought by Detroit-based private equity firm Huron Capital in 2019. WD Lab Grown Diamonds made $33 million in revenues last year, and brought in $8.36 million so far this year, according to the company's bankruptcy filing.
A summary of WD Lab Grown Diamonds' upcoming intentions will be released this week, the company has stated. Huron Capital and Tree Line Direct Lending representatives were not immediately available for comment at the time of this publication on Sunday.
Lab-grown diamonds have become an increasingly popular alternative to mined diamonds, given the lower costs and ethical processes associated with their production. Of late, synthetic diamondshave been snatching market share away from natural diamonds, with 46.6% of loose diamonds set by specialty jewelers being lab-grown in February, compared to just 13.7% in 2020, according to data from trend analytics company Tenoris.
In February, year-over-year unit sales of lab-grown diamonds were up 59%. They are the “fast-growing category” in Signet Jeweler’s jewelryportfolio, Chief Executive Virginia Drosos told CNN in April.
In Delaware federal court on October 11, WD Lab Grown Diamonds, one of the real pioneers in the business of making gems, filed for Chapter 7. The fact that the company didn't even try to restructure and that no one seems to be interested in buying its assets is a stark reminder of how bad its finances were before it filed for bankruptcy.
A lot of people say that the Beltsville, Maryland–based business failed because of changes in the lab-grown business, mostly the move of diamond growing to India and China. With labor costs so low abroad, it's hard for U.S. growers to stay in business.
However, people who were there say there were other problems, mostly related to the fact that WD was bought in 2019 by the investment company Huron Capital, which paid for it with a mix of debt and equity. Tree Line Capital, a different fund, paid off the loan.