Filene's Basement Inc. filed
for Chapter 11 bankruptcy protection and concurrently announced that it had
entered into an agreement with an affiliate of Crown Acquisitions to purchase
17 of the chain's 25 stores, including the flagship stores in Boston and Union Square.
Crown, which is based in New
York, intends to continue to operate the
stores under the Filene's Basement name, while maintaining the chain's value merchandising
model.

The bankruptcy
and sale follows the acquisition of the sale of the chain last month by Buxbaum
Group last month. The business was bought from Retail Ventures Inc, the parent
of DSW Inc., after the discount clothing retailer experienced “significant
liquidity problems.”

The sale to Crown
is subject to Bankruptcy Court approval.

According to a statement
from Buxbaum, Crown is one of the largest real estate firms in the country,
with an ownership interest in more than 15 million square feet of retail and
office property throughout North America.
Crown previously owned and operated the Young World chain of retail stores in
five states.

The contract with Crown
is subject to a Bankruptcy Court auction under which additional offers for the
17 stores, the remaining Filene's Basement stores, and other Filene's assets
will be solicited. The auction is expected to be held in approximately five
weeks, subject to the approval of the Bankruptcy Court.

“This transaction
provides an excellent opportunity to continue the Filene's Basement tradition
of top-quality apparel at low prices in most of the chain's marquee
locations,” said Scott Rusczyk, President of FB
Acquisition II, the Buxbaum Group affiliate that acquired Filene's Basement on April
20.

In the filing in U.S.
Bankruptcy Court for the District of Delaware, the off-pricer, according to
Reuters, listed liabilities of up to $500 million and assets of up to $100
million. Top unsecured creditors included CIT Group/Commercial Services and
Jones Apparel Group Inc. 

Columbus,
Ohio-based Retail Ventures, which acquired the chain out of bankruptcy in 2000,
had said that it would not realize any proceeds from the transaction and that
it would continue to guarantee all of Filene's Basement's obligations under its
secured credit agreement.

 

Since the
start of the year, Filene's has announced plans to close 11 of its 36 stores
and warned in February that it may need more money beyond its current lending
agreements.