2008年8月18日星期一

It will liquidate jewelry stores

After 113 years in business, Whitehall Jewelers said Tuesday that its 373 stores in 39 states will be liquidated following the Chicago-based company's inability to find a buyer or drum up fresh equity after filing for Chapter 11 in late June.

The sale, which will begin Wednesday, was ordered by the bankruptcy court as a result of Whitehall's Chapter 11 filing.

"We're experiencing the most active period of liquidation sales in 10 years, due to a combination of consumer cutbacks on peripheral spending and tightening by retail lenders," said James Schaye, CEO of retail liquidator Hudson Capital Partners.



As part of a joint venture, Hudson Capital Partners, Great American Group, Silverman Jeweler Consultants and Gordon Brothers Group will manage the liquidation sale.

Inventory will be liquidated at below-market prices in a sale that is expected to last about 4 1/2 months.

Merchandise to be sold will include a selection of diamonds, gold, precious and semi-precious jewelry and watches.

On Tuesday a judge also approved Whitehall Jewelers Holdings Inc.'s request to employ a financial consulting firm over objections by a federal monitor who claimed that the move would represent a conflict of interest.

The jeweler may utilize FTI Consulting Inc.'s financial advisory services to help it conserve cash and identify possible sources of financing during its bankruptcy proceedings, according to court papers.

U.S. Trustee Roberta A. DeAngelis expressed concern regarding FTI's relationship with Fabrikant Inventory LLC and Fabrikant Receivables LLC, two of Whitehall's largest creditors.

FTI had provided services to the companies, as well as companies owned by Prentice Capital Management LP, the jeweler's majority shareholder.

As a result, Judge Kevin J. Gross of the U.S. Bankruptcy Court in Wilmington, Del., included provisions regarding FTI's interactions with the two Fabrikant companies in an order that he signed Friday.

He specified that FTI could not participate in any matters involving the Fabrikant claims and that the consulting firm must maintain an "ethical wall" when serving as Whitehall's financial adviser.

Whitehall and FTI vehemently had defended their right to work together, saying the trustee's "position is without merit."

They also said that FTI's involvement in the case was crucial to preserving the jeweler's value.

Whitehall filed for Chapter 11 protection June 23, listing assets of $207.1 million and debts of $185.4 million.

Founded in 1895 as Marks Bros. Jewelers, the jewelry retailer operates 373 stores, including 78 stores that it purchased for about $14.3 million in April from jeweler Friedman's Inc. during that company's Chapter 11 case.

Whitehall said that after several years of financial difficulties, the Friedman's purchase was part of its efforts to turn its business around and avoid a bankruptcy filing.

Despite these efforts, the jeweler was unable to overcome an ever-constricting cash supply in the face of declining sales and the global credit crunch.

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