According to JCK News, Finlay Enterprises has failed to make a $1.7 million interest payment on its Senior Notes due on July 1. This is considered a default under the indenture governing the Senior Notes and its Revolving Credit Agreement.



Finlay Jewelry stated: “Finlay Jewelry does not intend to make the interest payment on the Senior Note.”



According to the jewelry company, in a default the trustee or holders of at least 25% of the notes have the right to declare them immediately due and payable. An acceleration of the Senior Notes is considered a default under the terms of its Senior Secured Second Lien Notes and Senior Secured Third Lien Notes.



Jewelry retailer Finlay has also been in default of another covenant under the Revolving Credit Agreement since last February. According to the covenant, the achievement of certain weekly targeted percentages of sales and cash receipts and maintenance of cash disbursements below certain targeted percentages is expected.



Finlay recently announced that there was “substantial doubt about its ability to continue as a going concern,” and stated that it was beginning a formal process to sell its assets. In February Finlay Jewelry announced it was shutting down its department store business.