UPDATE 1- Court approves Boscov's sale to family-led group

(Updates throughout)

NEW YORK Nov 21 (Reuters) - A court approved the sale of bankrupt department store chain Boscov's Department Store LLC on Friday to a family group led by Albert Boscov and Edwin Lakin.

"In these very dark economic times the Boscov family, through its purchase here, has indicated it has faith in the future," said Judge Kevin Gross in U.S. Bankruptcy Court in Delaware.

The deal is expected to close by Nov. 26, said Brad Erens, a lawyer representing the family group.

The group sought to rescue the Northeast department store chain from bankruptcy protection following its August bankruptcy filing, in a deal worth about $300 million.

The group is putting up around $50 million in new equity and has lined up additional lenders who will take a junior position to banks that are providing $210 million in senior loans to the company, according to court papers.

Unsecured creditors in the bankruptcy case will receive around $8 million from the family group in exchange for agreeing not to sue over matters connected to the company's past financial troubles.

Bankruptcy creditors are also slated to receive an expected $7.7 million tax refund, lawyers said.

The Reading, Pennsylvania-based Boscov's filed for bankruptcy protection in August and said on Nov. 4 it had signed an agreement to sell its assets to the family group, terminating a previously announced deal with Versa Capital Management Inc.

Both bidders offered the company a cash consideration of $11 million and the assumption of certain liabilities. Boscov's said in court papers that Versa had been seeking to delay the closing of the sale until January, which could have meant a lower purchase price.

Versa, a Philadelphia-based private equity firm, had filed a limited objection to the sale, saying it should be paid a $4 million break-up fee. The break-up fee matter remains unresolved and will be negotiated later.

Albert Boscov is the uncle of Boscov's chief executive, Ken Lakin, and was previously the chairman and chief executive of the chain. Edwin Lakin is Ken Lakin's father.

Founded in 1911, Boscov's is a family-owned U.S. department store chain with 39 locations on the East Coast. The company, which has been closing stores as part of its restructuring plan, had struggled to find new equity investors, and was hurt amid lower consumer spending and tightened terms by vendors in the recent economic downturn.

With sales of $1.25 billion for the year ended Feb. 2, Boscov's had $538 million in assets and $479 million in liabilities as of May 3, according to court filings.

In the last year, more than a dozen other U.S. retailers have gone bankrupt, including Goody's Family Clothing Inc, Linens 'n Things Inc, Mervyn's LLC and Shoe Pavilion Inc SHOEQ.PK. (See here for SHOP TALK -- Reuters' retail and consumer blog) (Reporting by Sarah Coffey; editing by Jeffrey Benkoe)