Raman Handa's was an immigrant success story.
After leaving India and opening a store in Harvard Square almost three decades ago, he built his Alpha Omega Jewelers into a well-known chain by showcasing luxury watches from Rolex, TAG Heuer, and Movado and enticing actors, politicians, and other celebrities to shop in his stores.
But he was tempted by the bigger profit margins the purveyors of fine jewelry enjoyed.
He shifted to selling products from the likes of Bulgari and Lazare Diamond over the past five years, but his ambitions outpaced his ability to lure new customers. Handa wound up stuck with unsold stock, according to documents filed in US Bankruptcy Court this week that lay out details of the jeweler's rise and fall.
The value of the inventory soared almost 80 percent, from about $15.1 million at the end of 2002 to about $27 million in the fall of 2007 - due to what now looks like an overly ambitious expansion into a new market.
Sales plummeted from $35.8 million in 2006 to an anticipated $25 million in 2007.
And unpaid bills began piling up last spring. Print publications began denying Handa advertising space over the summer. As their livelihood began to unravel, the Handa family mortgaged their two-acre Lexington estate for $1.5 million last fall, in an effort to restructure Alpha Omega while seeking a buyer or investor.
"The process, while necessary, was personally distressing to Mr. Handa," according to a statement in Wednesday night's bankruptcy filing given by Michael O'Hara, who was named as the company's chief restructuring officer two weeks ago.
Handa admitted himself to a hospital around Dec. 12, and a few days later left the country with his family - a step that prompted his banker, which Alpha Omega owes about $18 million, to seize the company's assets.
According to the bankruptcy filing, the company owes more than $12.7 million to suppliers; other creditors, including The Boston Globe, are owed more than $1 million more.
The company is asking the court to approve an auction of its assets, with the initial bid entered by a joint venture between Tiger Capital and Gordon & Co. for 70.25 percent of the value of the inventory.
The inventory was estimated to be worth $18.7 million on Dec. 31, which would mean the joint venture's bid is worth about $13.1 million. The actual value of the inventory is expected to change as items are sold while the auction proceeds.
Alpha Omega expects its stores to be open for business through the end of the auction, which is tentatively slated for late January.
According to Alpha Omega, the top three creditors are Rolex Watch USA Inc., with a $1.46 million claim; The Boston Globe, $1.15 million; and Swatch Group U.S., $665,985.
Alpha Omega burnished its brand name over seven years by advertising aggressively, buying up multiple pages in magazines and newspapers and splashing its image on billboards. It drew in high-profile customers like former President Clinton, Boston Celtics star Paul Pierce, and film star Ben Affleck.
The chain advertised "more than any other jeweler I've ever seen," said Richard Caso, a manager at De Scenza Diamonds and a member of its advertising board. "We were dumbfounded with the amount of advertising and understanding the costs. We do about one-tenth as much" - though Caso said he would spend more if he could afford it.
In 2006, Alpha Omega spent about $1.9 million on ads, but mounting debt prevented it from maintaining "any consistent advertising presence in the marketplace" during the second half of 2007, according to its bankruptcy filing.
Lawyers handling Alpha Omega cases said they have been in touch with Handa via phone or e-mail since his departure, but since Christmas they have not received updates on his whereabouts or his timetable for returning.
Neil Sherring, one of the lawyers who is a longtime family friend, said Handa had been convalescing in India with the help of the country's traditional Ayurvedic treatments, including meditation, yoga, and herbal remedies.
Amit and Nidhi Handa, the son and daughter who hold senior positions in the family business, had traveled to England to meet with advisers about restructuring the company, according to the bankruptcy filing. Neither responded to interview requests left on their cellphones and sent online over the past week.
The family's abrupt departure jolted Alpha Omega's lender, the LaSalle Business Credit arm of Bank of America Corp., in part because the patriarch held the company's sole check-signing authority, the bankruptcy documents stated.
LaSalle obtained an order to seize inventory on Dec. 20. Alpha Omega's stores in Harvard Square and at the Prudential Center, the Natick Collection, and the Burlington Mall were closed for the next two days, angering customers who had planned to pick up watches and jewelry in time for Christmas.
On Dec. 21, Handa and his wife - the company's sole directors - gave their consent via e-mail to appoint O'Hara as chief restructuring officer and to file for bankruptcy protection. They also agreed to bring in an inventory liquidation specialist, Tiger Capital Group LLC, to sell the chain's assets.
The new management reopened the stores over the next two days and rehired the 100 employees, who days earlier were told they were being laid off.
O'Hara celebrated Christmas morning with his family but was back to work that night, working on the negotiations with banks, vendors, and potential buyers. Gordon Lewis, brought in with O'Hara as chief financial officer, rang in the new year sorting through budgets and preparing bankruptcy papers.
They weren't the only ones hustling to deliver court documents. On Christmas Eve, The Boston Globe - the jeweler's largest unsecured creditor, with $1.58 million in bills for advertisements through Nov. 1 (more than Alpha Omega said it owes) - filed for a restraining order and permanent injunction against Alpha Omega. Boston Magazine, the 20th-largest creditor, with $176,654 in bills, did the same.
On Wednesday afternoon, several Middlesex County deputies showed up at the Burlington Mall store, with a court order to seize the money in the cash register if the Globe could not reach an agreement with the jeweler, said Michael Hartigan, the sheriff's public information officer. The parties were able to settle the situation without the deputies intervening, he added.
The two publications' litigation underscored the jeweler's need to file for bankruptcy "in order to pursue an orderly sale or other divestiture of its assets," according to the company's filing.
Boston Magazine's president did not return a call for comment yesterday. The Globe's chief advertising officer, Sam Martin, said through a spokesman that he could not answer questions about Alpha Omega due to a company policy not to comment on business agreements. "We are obviously disappointed by the recent development surrounding Alpha Omega Jewelers," he said in a statement. "They have been a steady advertiser in good standing with us for the past 20 years."
Nicole C. Wong can be reached at nwong@globe.com.
