The Friedman's Inc. jewelry chain has filed for Chapter 11 bankruptcy protection, citing "short-term liquidity issues." The company is being sued by Florida, Texas and Tennessee for allegedly using deceptive tactics in the way it charged customers for insurance.

The voluntary petitions for reorganization under Chapter 11 were filed in Savannah, Ga., where the company is based.

The Chapter 11 filing "should provide the company with the breathing room necessary to complete financial restructuring initiatives the company embarked upon more than five months ago," a statement by Friedman's.

"The filing was prompted by limitations imposed on funding this week by the company's lenders following the lenders' decision not to agree to amended financial covenants in the Company's credit facility. As a result of the funding limitations, Friedman 's was unable to satisfy all of its cash requirements in the ordinary course of business," Friedman's said.

Late last year, Florida Attorney General Charlie Crist said some 19 states were expected to join Florida's litigation against Friedman's, which has 650 stores nationwide. Crist estimates that Friedman's allegedly sold $46.7 million of the insurance in 19 states, but failed to adequately disclose the costs to customers.

According to the Florida complaint, between 1998 and 2002 Friedman's added charges to retail contracts for life, credit disability and property insurance. Friedman's allegedly collected approximately $46,709,000 from the 19 states combined. In Florida alone, it is estimated that the company collected more than $2,265,000.