IDE Warns Against Private Settlements and Returning Goods

In an urgent message, the Israel Diamond Exchange reminded members that when reaching private settlements with debtors, they still need to inform the appropriate Exchange bodies of the offer. A number of financially troubled diamond companies in the Exchange are cancelling purchase agreements, returning the diamonds to the sellers instead of forwarding due payments.

In some cases, the retuned goods represent only a portion of the debt. Owed companies are sometimes willing to accept these partial payments and forgo the reminder of the debt with the understanding that at times of hardship its better to get part of a payment than none at all.

The global diamond exchanges have mechanisms to handle these situations. The Tuesday IDE announcement, signed by IDE President Avi Paz, seeks to ensure that even if such agreements are reached outside of these systems, that the Exchange be notified so they can be examined and verify that the agreements will not cause any financial-commercial harm to other IDE members.

Paz went as far as warning of membership cancellation if such risk exists.

Paz reminded members that even if they have reached a debt settlement with another exchange member, they can still press charges in the IDE if the agreement was reached under duress, emphasizing that full payment can be demanded.

Such a charge has been recently made and it is currently being reviewed by the IDE arbitration institute.

At least three companies have been returning goods in the IDE in the past few weeks, and according to traders, settlements have been reached by a few more companies.