A bankruptcy judge on Wednesday approved the sale of Filene's Basement Inc. to Sym's Corp. and Vornado Realty Trust after a heated auction that failed to net a clear winner in the first round of bidding. In the end, the winning pair, which were said to be the retailers buyer of choice, prevailed with a bid of approximately $62.4 million.
The Mens Wearhouse, which had been the high bidder in the initial auction in early June, did not get bankruptcy court approval for their play.
The participation of Syms and Vornado in the initial bid process brought heavy criticism from Crown Acquisition, which is a retail real estate investment firm. Crown apparently questioned Syms qualifications to participate in the auction, according to published reports.
In court papers obtained by Footwear Business Update, crown argued that Syms failed the qualification test because its most recent financial statement indicated that it “lost millions of dollars last year, suffered a substantial reduction in working capital and had previously defaulted in its working capital covenant with its banks.” Crown also suggested that Vornado, was “in default for millions of dollars of obligations owed to the debtors.”
“The bottom line was that there was a substantial risk whether Syms could finance the purchase and provide landlords with adequate assurance of future performance,” Crown argued.
The presiding judge in the U.S. Bankruptcy Court in Delaware reopened the auction last week and sided with the Syms/Vornado partnership in the end, defeating a bid by Crown and K&G Acquisition Corp., a subsidiary of The Mens Wearhouse.
Filene's Basement filed for Chapter 11 bankruptcy protection on May 4, 2009, two weeks after former parent Retail Ventures Inc. sold the chain to a Buxbaum Group affiliate.
