Filene's Basement announced that an affiliate of Men's Wearhouse
emerged as the winning bidder in a nine-hour bankruptcy auction for
assets of the off-price chain that was held in Manhattan on Friday.
Other bidders included Syms and New York real estate firm Crown
Acquisitions.
The affiliate, K&G Acquisition Corp., offered a total of $67.0
million that will cover the purchase of 17 to 20 of Filene's store
leases; inventory from all 25 existing locations; leases for the
company's headquarters in Burlington, Mass., and distribution center in
Auburn, Mass.; as well as the Filene's Basement trade name. Men's
Wearhouse's bid–which is subject to a hearing in Federal Bankruptcy
Court in Wilmington, Del. on June 10–includes approximately $5.0
million associated with potential litigation revolving around Filene's
lease at the currently inactive Downtown Crossing redevelopment project
in Boston.
“We are extremely pleased with the outcome of the auction,” said Scott
Rusczyk, President of FB Acquisition II, the Buxbaum Group affiliate
that acquired Filene's Basement from Retail Ventures on April 20 and
then filed to reorganize under Chapter 11 of the Federal Bankruptcy
Code on May 4. “If ratified by the court, the Men's Wearhouse bid
allows for the continuation of one of the industry's most iconic
off-price brands under the aegis of a preeminent specialty retailer.
Equally important, the agreement is expected to preserve jobs for the
vast majority of Filene's 1,600-plus employees, while maintaining
relationships with many of the vendors that historically sold to the
chain and preventing vacancies in at least 17 of the retail properties
where the chain was an anchor or sub-anchor tenant. Given the
disappearance on many prominent retail brands during the past 18
months, this development speaks volumes about the special place the
Filene's Basement name and concept holds in the hearts of consumers.”
Men's Wearhouse competed in the auction against an affiliate of New
York-based developer Crown Acquisitions, as well as a group consisting
of off-price retailer Syms and Vornado Realty Trust. Under a previously
announced 'stalking horse' bid, Crown had agreed to purchase the trade
name and leases for 17 stores, but not the inventories, for
approximately $22.0 million.
“With the inventories ultimately expected to be added into the
equation, we anticipated that the auction bids would be north of $40
million. Accordingly, the winning bid was a great result,” said
Filene's Chief Restructuring Officer Alan Cohen. “It was a very
spirited auction.”
Stores that will not be acquired are expected to be closed by mid-June,
with employees in those locations receiving all assistance outlined
under their employment agreements with Filene's. Because Men's
Wearhouse had agreed to acquire all inventories, no liquidation sales
are planned.
Men's Wearhouse is expected to retain most employees in the store and
corporate facilities it is acquiring. The company is also expected to
honor Filene's Basement gift cards or merchandise credits.
Discussing the disposition of the Filene's Basement bankruptcy case,
Cohen said he anticipates that unsecured creditors will be asked to
submit proofs of claim before Labor Day. That would set the stage for
the company's bankruptcy plan to be confirmed by September or October,
with creditors paid the following month, allowing for the case to be
concluded by the end of 2009.
In addition to Alan Cohen, advisors to Filene's Basement include legal counsel Pachulski, Stang, Ziehl & Jones LLP.
