Whitehall Jewelers, a jewelry chain with nearly 400 stores and more than a century of history behind it, is liquidating less than two months after it filed for Chapter 11 bankruptcy protection. It’s the second major jewelry chain to liquidate this year.
In an e-mail to company managers, then-CEO Michael Don said it was obvious the chain had to close after its Aug. 1 auction, during which the highest bid was submitted by liquidator Gordon Brothers.
“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 closed his e-mail 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 goodbye to very many people. Please know this was not my choice. I wish you all the best.”
At press time, it was unclear how many Whitehall stores would be bought by other companies as going-concern operations. Australian retailer Michael Hill has announced plans to buy 17 stores—15 in Illinois and two in Missouri. Gitanjali, once named as a bidder for the entire chain, has said it’s interested in buying up to 150 store leases.
In an e-mail to employees, Mark T. Funasaki, Whitehall’s executive vice president and chief administrative officer, said, “There are still parties that are interested in clusters of stores, and we fully expect that some of the stores will be sold to other operators in small groups.”
He noted that over 200 of the company’s stores will be open until the end of the year.
Inventory will be liquidated at below-market prices, in a sale that’s expected to last approximately four and a half months, according to a Whitehall statement. Merchandise to be sold will include a selection of diamonds, gold, precious and semiprecious jewelry, and watches.
The liquidation is being run by Gordon Brothers and Great American Group, in conjunction with Hudson Capital Partners and Silverman Jeweler Consultants. The split between Gordon Brothers and Great American Group is an unusual one; Gordon Brothers had the highest bid at the auction of the company’s assets, but Great American was favored by the company’s lawyers. After a day of heated testimony in court, the two parties split the responsibility in a court settlement.
James L. Schaye, president and chief executive officer of Hudson Capital Partners, noted: “We’re currently experiencing the most active period of liquidation sales in 10 years, due to a combination of consumer cutbacks on peripheral spending, tightening of retail lenders, and a change in bankruptcy code.”
Whitehall Jewelers operates 373 retail stores in 39 states, including 78 retail locations acquired in April 2008 from Friedman’s. It has 2,800 employees. It was founded in 1895 under the name Marks Bros. Jewelers.