NEW YORK (Reuters) - Troubled U.S. discount clothing retailer Filene’s Basement has been acquired by an affiliate of the Buxbaum Group, a firm that specializes in corporate turnarounds and retail liquidations.
Filene’s parent company, Retail Ventures Inc RVI.N, said on Tuesday it had disposed of the unit for no net proceeds, after the discount clothing retailer experienced “significant liquidity problems.”
Filene’s Basement, known for its off-price clothing and annual “running of the brides” wedding gown sales, was put up for sale after weeks of talks with suppliers and lenders in an effort to help it avoid bankruptcy.
As sales dropped off earlier this year, the 100-year-old chain announced plans to close 11 of its 36 stores, and warned in February that it may need more money beyond its current lending agreements.
The chain has hired Pachulski, Stang, Ziehl & Jones LLP as legal counsel, and Alan Cohen, chairman of turnaround firm Abacus Advisors, as chief restructuring officer, Retail Ventures said in a statement. It did not say whether any more stores would be closed, but said “future plans for the operation of the Filene’s Basement business are uncertain.”
Columbus, Ohio-based Retail Ventures, which acquired the chain out of bankruptcy in 2000, said it would not realize any proceeds from the transaction and that it will continue to guarantee all of Filene’s Basement’s obligations under its secured credit agreement.
However, Retail Ventures said lenders have agreed to not demand payment immediately.
Retail Ventures said it has also begun reviewing available options for its own liquidity position, which could include a sale of its large stake in discount shoe retailer DSW or the issuance of shares of common stock.
Retail Ventures said it wasn’t aware of any liquidity difficulties at DSW.
Filene’s Basement was started about 100 years ago as a bargain basement for the Filene’s department store in Boston to sell its excess merchandise. Federated Department Stores, now called Macy’s Inc (M.N), had bought the chain in 1929. Filene’s Basement had also filed for bankruptcy once before in 1999, but emerged the following year, when Value City, which later became Retail Ventures, bought its stores.
Its flagship store in downtown Boston closed temporarily in 2007 for redevelopment of its building.
Editing by Richard Chang and Lincoln Feast