Whitehall Jewelers, Inc., the wholly owned subsidiary of Whitehall Jewelers Holdings, Inc., said Monday that it has received two default notices, which have triggered a number of events with its lenders and vendors that may force the company to seek bankruptcy protection.

In an 8-K filing with the Securities and Exchange Commission Monday, the jewelry retail chain said that on June 11 it received a default notice for its failure to make payment on a $3.06 million promissory note to Fabrikant Receivables, LLC, and a default notice for its failure to make payment on a $2.07 million promissory note from Rosy Blue, Inc. Both notes were issued by Whitehall to the two suppliers on April 20, 2007.

The Chicago-based company said it has until June 21 to pay these notices or be in default. If an agreement cannot be made they will be required to make full payments on the notes.

Whitehall also said in its filing it has additional unsecured trade debt with Fabrikant of approximately $1.5 million.

If Whitehall fails to pay off these loans and debts, it will be in default of its senior credit agreement with La Salle Bank and other lenders of $64.5 million outstanding, and its loan credit agreement with PWJ Lending LLC of $40 million outstanding.

However, if Whitehall pays or makes an agreement with Fabrikant and Rosy Blue, other vendors said they want similar payments, assurances, or agreement terms, or they will no longer provide merchandise to the company. According to the 8-K filing, Whitehall has $13.5 million in trade debt.

“If the company is unable to provide such additional payment assurances or does not agree to such accelerated payment terms, the company will likely be unable to maintain its inventory levels, which would have a material adverse effect on its results of operations or financial condition,” Whitehall said in the SEC filing.

“Based on the company’s cash on hand as well as current and anticipated cash flow from operations, the current borrowing availability under the Senior Credit Agreement is not adequate to meet the company’s working capital and capital expenditure needs beyond the end of June 2008,” Whitehall said in its filing. “Therefore, the company needs additional financing in the near term to fund its working capital and capital expenditure needs. The company is actively considering various financing options and may seek protection under the Federal Bankruptcy Code.”

JCK