Whitehall Goes Chapter11

Whitehall Jewelers in June became the latest mass marketer to declare Chapter 11.

At press time the 373-store chain was planning to sell its assets at an auction July 18 and said it was considering every option, including continuing as a going concern and liquidation.

In its filing, Whitehall said that while it had approached a number of possible buyers, none had submitted a formal offer, and the highest bid had come from a trio of liquidators: Great American Group, Hudson Capital Partners, and Silverman Jewelers Consultants.

In a subsequent bankruptcy hearing, however, Whitehall’s attorney said that a company had expressed serious interest and was performing due diligence. Later, an Indian press report said that Gitanjali, the India-based owner of the Samuels and Rogers chains, wanted to buy Whitehall. (The head of Gitanjali’s U.S. office declined comment.) Gitanjali later said in court it was partnering with liquidator Gordon Bros. Another bidder was said to be interested.

Whitehall has assets of $207.1 million and liabilities of $185.4 million, according to its bankruptcy papers.

The company has had financial difficulties for some time, it admitted in its papers. It said that actions to improve its performance included “closing underperforming stores and strengthening management through the addition of experienced personnel at the executive level and in the merchandising and marketing areas, the repositioning of inventory, [and] improvements in merchandise assortment.”

In addition, the company bought 78 stores from Friedman’s in April during that company’s liquidation “to strengthen the overall enterprise by combining the best performing stores of Friedman’s/Crescent.”

Nevertheless, Whitehall “continued to experience significant losses and decreased sales,” its filing said. “The general economic downturn and tightening of the credit markets, among other factors, have contributed to a decline in consumer discretionary spending, particularly in the luxury goods sector. Such factors have also contributed to a tightening or elimination of credit terms among the [Whitehall] vendors, restricting the Debtors’ access to new merchandise” and ultimately restricting access to credit.

The company was founded in 1895 under the name Marks Bros. Jewelers. It has 2,800 employees and operates in 39 states. Whitehall’s largest unsecured creditors include SDC (Sangam Diamonds Corp.), owed $11.3 million; Kiran Jewels, $9.4 million; Combine International, $7.0 million; Rosy Blue, $6.9 million; and Envisions LLC, $4.5 million.