Funds News

UPDATE 1-Judge OK's Fortunoff sale, liquidations to begin

*Liquidators win auction for Fortunoff

*Store closing sales to begin Wednesday (Adds court ruling, details on sale agreement, byline)

NEW YORK, Feb 24 (Reuters) - A federal bankruptcy judge on Tuesday approved the sale of luxury retailer Fortunoff Holdings LLC to a group of seven liquidators, setting the stage for it to begin liquidating as early as Wednesday.

Liquidators Great American Group, Hudson Capital, SB Capital, Tiger Capital, Kimco Realty Services, and jewelry liquidators Bobby Wilkerson Inc and The Gordon Company had made the winning bid at a bankruptcy auction for the company on Monday. They are planning to begin going-out-of-business sales on Wednesday, Great American Group said.

U.S. Bankruptcy Judge Robert Drain of the Southern District of New York approved the arrangement after the joint venture beat out a bid from rival liquidator group Gordon Brothers at the auction.

The winning liquidators guaranteed Fortunoff would receive 88.8 percent of the cost value of the merchandise they sell, while lawyers for Fortunoff said in court that the other bid had only guaranteed 77 percent of the value.

The liquidators agreed to allow customers who have returned merchandise before Wednesday to use their store credit through March 8.

The company, which sells jewelry, dinnerware and furniture in New York, New Jersey, Pennsylvania and Connecticut, filed for bankruptcy protection earlier this month. Fortunoff is owned by NRDC Equity Partners, a private equity firm that bought the retailer out of an earlier bankruptcy last year.

The case is In re:Fortunoff Holdings LLC, U.S. Bankruptcy Court, Southern District of New York, No. 09-10497. (Reporting by Emily Chasan and Phil Wahba; Editing by Gary Hill)