In the latest development concerning Finlay's Fine Jewelers, one of the members of the Board of Directors resigned on Monday. Finlay Enterprises Inc (in a regulatory filing to the US Securities and Exchange Commission) announced that Rohit M. Desai notified the company that he was resigning from the Board of Directors of both Finlay Enterprises Inc and Finlay Fine Jewelry Corporation (the wholly-owned jewelry subsidiary), with immediate affect on July 6, 2009.

This comes after the news that the President and Chief Operating Officer, Joseph M. Melvin, announced his retirement from Finlay Fine Jewelry Corporation (and also from the parent company, in which he is Executive Vice President and COO) effective as of August 15, 2009.

The company stressed that Desai's resignation was "not the result of a disagreement...on any matter pertaining to Finlay's operations, policies or practices."

Last week, Finlay Fine Jewelers reported that they have defaulted on their latest interest payment which was due on June 1st. A 30-day grace period was offered, but the company was unable to meet the $1.7m interest payment after that 30-day grace period either, which "constitutes an event of default", both for their Senior Notes, and also for the company's Revolving Credit Agreement, according to the public filing. Although the holders of the Senior Notes and the Revolving Credit Agreement are now allowed to immediately recall these loans (which were more than halved in recent months), they have not yet done so. Such a move would force immediate steps to be taken in light of the insolvency of the company.

Sources say that fine jeweler Finlay has been in talks with potential suitors in a possible move to sell some of the remaining freestanding retail jewelry stores. The company had announced earlier this year that it would be immediately closing all of their department store fine jewelry counters, and only keeping the freestanding stores - but the decline in jewelry sales and repeated inabilities to meet financial obligations have thrown doubt into Finlay's ability to continue to operate the remaining freestanding jewelry stores in particular, and the enterprise in general.