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Big Producer WD Lab Grown Diamonds Files For Bankruptcy

By Julia Griffith

In an unexpected twist, WD Lab Grown Diamonds, the second-largest laboratory-grown diamond producer in the US, has filed for bankruptcy, causing ripples of concern throughout the laboratory-grown diamond sector.

M7D Corporation, the parent company of WD Lab Grown Diamonds, operating from Washington, DC, is under the ownership of private-equity firm Huron Capital. The latter made a substantial equity investment in WD Lab Grown Diamonds in January 2019, with hopes to strengthen its presence in both gem-quality and industrial-quality sectors.

On October 11, 2023, the company officially filed for Chapter 7 bankruptcy, revealing liabilities amounting to a staggering $44.8 million against assets valued at a modest $3.1 million. With a list of 100 to 199 creditors, most of whom are unsecured, the future looks grim for those seeking a return on their investments. While the exact reasons for this bankruptcy filing remain undisclosed, it serves as a stark reminder that even the most promising ventures can encounter a dire ending.


A record-breaking 9.04-carat laboratory-grown diamond grown by WD Lab Grown Diamonds.
© WD Lab Grown Diamonds (used with permission)


Why Is This So Surprising?

Since its establishment in 2008, WD Lab Grown Diamonds has been a pioneer in the laboratory-grown diamond industry, specialising in the Chemical Vapor Deposition (CVD) production method.

They were renowned for a commitment to environmentally responsible and traceable products, and had many of their stones SCS-certified as “Responsibly Sourced [laboratory-grown] Diamonds” by third-party verifier SCS Global Services. They were the first laboratory-grown diamond producer to obtain this standard.

WD Lab Grown Diamonds set numerous industry benchmarks, including two record-breaking achievements for big sizes of CVD laboratory-grown diamonds - the larger being a 9.04-carat round brilliant in May 2018 (this record has since been surpassed).


Record-breaking 9.04-carat laboratory-grown diamond by WD Lab Grown Diamonds
© WD Lab Grown Diamonds (used with permission)

More amazingly, they were noted for not treating their stones to improve colour. Unlike the majority of CVD producers, WD Lab Grown Diamonds produced as-grown high colour grades (equivalent to D-E-F grades*) without submitting their stones to post-growth treatments to remove brown hues.

Considering all this, one would have thought they were at the forefront of it all.

*Side note: I, myself, have one of WD Lab Grown Diamonds SCS-certified stones set in a single-stone ring. This was graded a D-colour by IGI. The laboratory-grown diamond report states that there is no evidence of post-growth treatment. This ring was generously gifted to me by Kay Bradley of Bradley’s Jewellers York.

Untreated D-colour equivalent laboratory-grown diamond by WD Lab grown Diamonds.
Part of the Eco Rocks collection by Bradley's Jewellers York


The Unpredictable Twist

The announcement of their financial struggles has left the industry questioning the strength of this sector. Laboratory-grown diamonds have been gaining momentum due to their marketed ‘sustainability’ and lower-price points. Unfortunately, this success has been followed with an oversupply of the stones which has negatively affected wholesale and retail prices for the past several years.

Is this the reason for WD Lab Grown Diamonds downfall? It's hard to say. The shift of the market to the majority of gem-quality production to India may be a factor. China is the second largest producer. It is becoming increasingly difficult for companies in other countries to compete with the lower production costs overseas.

WD Lab Grown Diamonds was also recently involved in legal battles, being ordered to pay $153,000 to the Plumb Club earlier this year. They also dropped a lawsuit with another laboratory-grown diamond producer in September. This been ongoing since 2020, when WD Lab Grown Diamonds sued six CVD producers for breaching their patents held with the Carnegie Institution of Washington.


In Summary

As more details surface about this bankruptcy, we will gain a clearer picture of why this occurred and any repercussions it may have on the laboratory-grown diamond sector.

Though we do not know the exact reasons for their actions at this time, WD Lab Grown Diamonds' predicament may compel other industry players to re-evaluate their strategies.

Diamond Market Analyst, Paul Zimnesky, predicts a “shakeout” of laboratory-grown diamond producers. Some smaller producers have already dropped out of the game. WD Lab Grown diamonds are the first well-established victim.

In summary, there are many variables that could have impacted WD Lab Grown Diamonds decision. However, the story of WD Lab Grown Diamonds may serve as a cautionary tale. This industry may reveal more dramatic twists in the near future...


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