Suspension of Brinks Licence Blocks Diamond Shipments from Antwerp

An order by a Belgian Commercial Court rejecting the separation of the profitable diamond transport division of Brinks into a new company, Brink's Diamond & Jewelry, even as the parent company filed for bankruptcy has led to a major disruption in the shipping of diamonds out of Antwerp. The Antwerp World Diamond Centre has said that the Court’s order will lead to short term economic losses as well as harm the reputation of the centre in the long run.

Reports suggest that the blocked shipments could be to the tune of over US$ 200 million. Brinks is the sole licencee at Antwerp’s Zaventem airport, and following the order, courier companies have started using other airports to move goods out of the country.

Alain Zenner, temporary administrator of the Brussels Commercial Tribunal had ruled that the mandate of the administrators of the crisis-ridden company had expired in June and hence they had “no judicial grounds” to separate the most profitable business division, or even to enter a bankruptcy plea. Matters came to a head recently following two weeks of strikes and protests by staff, who were facing a change in job description and pay in line with the firm's cost-cutting plans. This led to the subsidiary of the Philadelphia-based company declaring the company in the red and firing 450 people.

Funding of the Belgium subsidiary had been suspended by the US based parent after what it described as an “unsuccessful effort to address a noncompetitive business structure”. Bloomberg reports that the company expected “a fourth-quarter non-cash charge of $15 million to $20 million related to asset impairments”. It adds that “through the nine-month period ended Sept. 30, 2010, the Belgium subsidiary had revenue of $32 million and an operating loss of $7 million. The loss includes $3 million in severance costs, which were recognized in the company's 2009 results.”