Merrill Loses Fight on Gem Sale

It’s not been a good day for Merrill Lynch (MER), with the $2 billion quarterly loss, the Moody’s review. Oh, and a few thousand more job cuts. But today just got even worse.

Merrill Lynch & Co.’s plan to auction what Christie’s International called “one of the greatest jewelry collections” was thwarted by jeweler Ralph O. Esmerian in a 48- hour showdown in three courts.
The sale, which Christie’s scheduled for April 15 and then delayed to yesterday amid the legal wrangling, “will not take place,” said Helen Chaitman, one of Esmerian’s lawyers, after a U.S. bankruptcy court hearing yesterday in Lower Manhattan.
Chaitman’s statement followed a private meeting between the lawyers of Esmerian, 68, and Merrill in the chambers of Judge Robert Drain, who didn’t issue a formal ruling.
Chaitman said Esmerian, a fourth-generation jeweler, got his wish to sell his family heirlooms through Fred Leighton Inc., the retailer he bought in 2006. Merrill had lent Esmerian $178 million, in part to buy Fred Leighton, and in October declared the loan in default. Merrill then sought to sell its collateral, Esmerian’s antique jewelry, through Christie’s.
Esmerian argued he could get far more for the jewels through private sales — and thus pay the debt by selling fewer pieces. Merrill spokesman Bill Halldin said the bank is grateful Leighton and other Esmerian entities will be under court supervision as a result of Leighton’s bankruptcy petition this week.
“We look forward to an expedited resolution of these matters and a full repayment of all funds due to us,” he said.
Christie’s said in a statement that it was “obviously disappointed not to proceed with the auction.”

Posted by on April 17th, 2008 at 12:39 pm


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