Whitehall Jewelers Files, Seeks DIP Loan
The company was founded in 1895 under the name Marks Bros. Jewelers.
June 26, 2008
Whitehall Jewelers of Chicago filed for bankruptcy protection on June 23 in Delaware's bankruptcy court.
Upon its filing, Whitehall asked the court to allow it to pay pre-petition obligations such as workers comp as well as various insurance policies. The company was founded in 1895 under the name Marks Bros. Jewelers and it is a unit of Whitehall Holdings, a Delaware corporation that trades on the OTC-Bulletin Board. As of its petition date, the debtor had 373 retail stores in 39 states.
Whitehall said in court documents that it has had financial difficulties "for several years" including recurring losses and significant negative cash flow from operations. The debtor looked to stem the losses by closing stores. However, "despite these and other efforts to complete a successful turnaround, the debtors like many retailers in this difficult economic environment, continued to experience significant losses and decreased sales," the company explained in court documents. "The general economic downturn and tightening of credit markets, among other factors, have contributed to a decline in consumer discretionary spending, particularly in the luxury goods sector."
Whitehall has also asked for court approval to get an $80 million debtor-in-possession loan. The DIP would be provided by Bank of America and Wells Fargo Retail Finance. The funds from the DIP loan would be used for regular business expenses, payroll, rent and utilities.
The debtor's counsel is Laura Davis Jones of Pachulski Stang Ziehl & Jones. The debtor has up to 49 creditors and the company's assets total $207 million while debts total $185.4 million. FTI Consulting is serving as a financial advisor for Whitehall.
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