Whitehall to Liquidate, Hopes to Sell Stores

Rob Bates, Senior Editor -- JCK Online, 8/4/2008 3:16:00 PM

Whitehall Jewelers, currently operating under Chapter 11 bankruptcy protection, is shutting down after a liquidator won its auction last week—but in an email obtained by JCK, the company’s president indicated that as many as half its stores could be sold.

An email by Michael Don, president and chief executive officer of the company that opened 113 years ago, said that, after last week’s auction, “it became evident that our chances of continuing as a going concern ended.”

“Despite many assurances and actions taken by our going concern prospect through the beginning of last week, this potential buyer failed to take the necessary steps to be successful at the auction,” Don wrote. “To say that we were surprised and disappointed would be a gross understatement … With this gone, we are not able to keep our Company operating as a stand-alone entity.”

Don said the company’s central office was closing, with 30 people being let go, including himself.

As for the company’s 300 stores, Don said: “We have had indications of interest for groups of stores which may total over half of our stores. This could provide opportunities for continued employment for many store Managers and Associates. Please keep working hard to put you in the best position to continue going forward with whoever acquires these locations.”

The other stores will be liquidated, Don said, but added as many as 200 may remain open through the end of the year.

Among the companies that could bid for the stores, sources said, is Indian company Gitanjali, the owner of Samuels and once mentioned as a bidder for the entire chain, and Australian/New Zealand company Michael Hill.

Don closed his email by saying, “We all sincerely regret that the Company is in this position. Unfortunately, several factors beyond our control, made it such that we were simply unable to avoid this outcome … Since this is my last day, regrettably, I will not have the chance to personally say good-bye to very many people. Please know this was not my choice. I wish you all the best.”

No one answered the phone at Whitehall’s main headquarters.

Whitehall Jewelers operates 373 retail stores located in 39 states, including 78 retail locations that were acquired in April 2008 from Friedman’s. It has 2,800 employees. It was originally founded in 1895 under the name Marks Bros. Jewelers.