HONOLULU -- Maui Divers Jewelry announced Tuesday that it has withdrawn its bid to buy troubled Hawaii retailer Hilo Hattie.

The jeweler agreed to continue operating as a vendor at the Hilo Hattie stores around the state.

This comes after Royal Hawaiian Creations bought the stock of Hilo Hattie as part of the company's reorganization out of Chapter 11 bankruptcy.

"All parties are happy we have reached an amicable solution that allows Hilo Hattie to move forward toward a bright new future," RHC owner Donald Kang said in a written statement.

"Don Kang presented us with a strong reorganization plan for renewed success and after careful consideration we believe it is in the best interests of Hilo Hattie creditors and other stakeholders for us to withdraw our purchase proposal," Maui Divers President and CEO Bob Taylor said in a written statement.

The bankruptcy court gave Kang time to flesh out his reorganization plan to bring the company out of financial trouble. If it is not approved, the store could face Chapter 7 liquidation, which is a complete shutdown of the company leaving 200 people out of a job.

The new plans are due on July 15.

The store filed for bankruptcy in October and lost more than $3 million.