Whitehall Jewelers Files for Chapter 11 Bankruptcy

Whitehall Jewelers Holdings, Inc. and its operating subsidiary Whitehall Jewelers, Inc. on Monday filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Last week, the company announced that it has accumulated approximately $13.5 million in trade debt.

On June 11, Whitehall received default notices from Fabrikant and Rosy Blue for failing to pay $6.78 million in outstanding debt. Under the jewelers’ senior credit agreement, failure to pay any amount in excess of $1 million constitutes a default.

In its announcement of the default, Whitehall said it is facing “significant challenges in meeting its ongoing liquidity requirements,” and “actively” considering its options, including bankruptcy protection.

The company said it negotiated $80 million in debtor-in-possession (DIP) financing from a number of banks. This credit facility would replace the company's previous $125 million revolving credit facility.

Whitehall plans to use the DIP credit to fund its working capital requirements, including employee wages and benefits, certain supplier payments and other expenses during the reorganization process.

The jeweler insists that it plans to continue to conduct business as usual while it develops a reorganization plan.