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Whitehall Jewelers files for Chapter 11

Whitehall Jewelers Holdings Inc. filed for Chapter 11 protection on Monday with an $80 million financing package that requires it to put its assets on the auction block in less than a month.

Whitehall, which recently acquired nearly 80 stores from another jeweler in Chapter 11 proceedings, said the terms of its $80 million bankruptcy loan require it to win bankruptcy court approval of a deal to sell its assets by July 18.

The Chicago company is asking the U.S. Bankruptcy Court in Wilmington, Del., for permission to hold an auction on July 16, at which it will consider "all alternatives regarding a disposition of substantially all of the assets." Whitehall said such options include selling all or a portion of its business as a going concern or selling the rights to liquidate its inventory.

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