April 9, 2009 / 10:31 PM / 10 years ago

UPDATE 1-Ultra Stores files for bankruptcy protection

April 9 (Reuters) - Retail jeweler Ultra Stores Inc, parent of Ultra Diamonds, filed for Chapter 11 bankruptcy protection on Thursday, citing weak economic conditions and loss of operating liquidity, court documents showed.

The company, which has 181 locations across the United States, listed assets and liabilities in the range of $10 million to $50 million in its filing.

In its filing, Ultra said it had secured a $30 million debtor-in-possession financing coupled with a commitment for an exit facility from Bank of America Corp (BAC.N). This is yet to be approved by the bankruptcy court.

Ultra said it had defaulted on certain debt covenants on its credit arrangement with Bank of America and term loan with Crystal Capital Fund Management.

The default eventually resulted in a loss of operating liquidity of about $11 million, said Ultra, which runs jewelry counters at discounters Daffy’s, Burlington Coat Factory BCF.N and Filene’s Basement, a unit of Retail Ventures Inc (RVI.N).

The company said in the wake of the weak December 2007 holiday season, it had taken steps to cut costs which included cutting executive pay and overall bonus and freezing corporate wages and hiring.

The case is in re: Ultra Stores Inc, U.S Bankruptcy Court, New York Southern District No 09-11854. (Reporting by Santosh Nadgir in Bangalore; Editing by Deepak Kannan)

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