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 Whitehall Jewelers Holdings Inc. is a painful example of how tough it can be for retailers these days to try and roll up acquisitions.
The jewelry retailer bought 78 stores of Friedman's Inc. out of that retailer's own bankruptcy just two months ago -- after an on-again, off-again flirtation with Friedman's -- and was still struggling with their integration when Whitehall lapsed into Chapter 11 on Monday.
Chicago-based Whitehall was cleared to acquire the stores for roughly $14.5 million on April 10 and now wants to sell those assets along with all its others in going-out-of-business sales, although it still hopes for a last-second going-concern bid. "The debtors, like many other retailers in this difficult economic environment, continued to experience significant losses and decreased sales," Whitehall said in its filing with the U.S. Bankruptcy Court for the District of Delaware in Wilmington. Whitehall pointed to the tight capital markets and particularly cited the luxury goods retail section as being hard hit because of a plunge in discretionary consumer spending. Whitehall was able to attract postpetition financing, however, even if there weren't many places to look. Prepetition lenders Bank of America NA and Wells Fargo Retail Finance LLC are supplying the $80 million revolving debtor-in-possession loan, which will refinance a $125 million prepetition revolver. Both loans are backed by the twinkling collateral of Whitehall's diamonds, gold, precious and semiprecious jewelry, and watches, which proved to not be such an allure when prepetition lenders already held liens on all the shiny assets. Court papers show third-party lenders were unwilling to supply a DIP because of the liens, the size of the loan, the state of Whitehall's business, the immediacy of its funding need and other reasons. Whitehall operated 375 retail jewelry outlets under the Whitehall Jewelers and Lundstrom Jewelers brands as of June 23. - Terry Brennan For more, see the full story from The Daily Deal Categories Deal Video
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