LONDON – Belgian bank KBC Group seized assets from one of the diamond industry’s most storied names as it seeks to recover unpaid loans, according to court documents.

KBC is seeking to recover €26-million ($29-million) from Exelco, and had bailiffs search the firm’s Antwerp offices as well as offices belonging to De Beers and ABN Amro Group, where Exelco might also hold assets, court documents seen by Bloomberg News show. Exelco also has credit lines with Standard Chartered, said people familiar with the matter, who asked not to be identified because it’s private.

Exelco’s financial troubles are another blow to an industry that’s struggling with thin manufacturing margins and the withdrawal of trade finance. Standard Chartered, one of the two leading lenders, said last year that it was exiting the diamond financing business, while KBC’s Antwerp Diamond Bank, which accounted for about 10% of the financing market at its peak, is being wound down.

The goods seized at the offices on June 22 were insufficient to cover the debt, the papers showed. KBC and Standard Chartered declined to comment. Exelco didn’t return emails and calls seeking comment.

Exelco lost its status earlier this year as one of De Beers’s 80 or so handpicked customers, known as sightholders, as it had been buying fewer diamonds from the top producer in recent years. The firm is now an accredited buyer, meaning it’s not guaranteed a set supply of rough diamonds and instead buys on a more ad hoc basis, people familiar with the change said. The company is still listed as a sightholder on both its and De Beers’s website.

POLISHING FIRMS
The so-called midstream segment of the market is dominated by family-run firms that cut, polish and trade stones in hubs such as Mumbai and Antwerp. These firms rely on loans to fund the purchase of rough gems from miners such as De Beers. Consultant Bain & Co. has estimated the average cutting and polishing firm had no profit margin in 2015, compared with profits of as much as 4% in 2013.

Exelco was founded by Leon and Lior Kunstler and Jean Paul Tolkowsky in 1993. Tolkowsky is a scion of one of the industry’s most famous families who made their name cutting the biggest and most expensive gems. Family members include Marcel Tolkowsky, who is seen as the father of the round brilliant diamond cut, and Gabi Tolkowsky, who was chosen by De Beers to cut the 546-carat Golden Jubilee diamond, the largest faceted stone in the world.

The company also supplies some of the world’s leading jewelry retailers, including Sterling Jewelers, Signet Jewelers and Chow Tai Fook Jewellery Group, according to its website.