Discount clothing retailer Filene’s Basement Inc., which was recently acquired by an affiliate of the Buxbaum Group and has a local history in Boston, filed for bankruptcy protection Monday, court documents showed.
The recession has been particularly severe in the fashion retail sector and the loss of sales and margin has hurt cash flow, the retailer said.
"The retail reaction to the recent economic downturn has narrowed the price differential between department stores and the value retailers and has substantially reduced consumer buying," the retailer said in an affidavit.
In a Chapter 11 filing with the U.S. Bankruptcy Court for the District of Delaware, the retailer listed liabilities of up to $500 million and assets of up to $100 million.
Filene’s Basement operates 26 stores and has 1,894 full- and part-time employees in the country.
Filene’s unsecured trade creditors included CIT Group/Commercial Services Inc. and Jones Apparel Group Inc., while the retailer’s unsecured landlord creditors included Best Buy Inc. and Federal Realty Investment Trust, according to the filing.
Buxbaum Group, which specializes in corporate turnarounds and retail liquidations, purchased Filene’s Basement from Retail Ventures Inc. last month, after the discount clothing retailer ran short of cash.
Columbus, Ohio-based Retail Ventures, which acquired the chain out of bankruptcy in 2000, had said that it would not realize any proceeds from the transaction and that it would continue to guarantee all of Filene’s Basement’s obligations under its secured credit agreement.
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 stores and warned in February that it may need more money beyond its current lending agreements.
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., had bought the chain in 1929.
Filene’s Basement has also filed for bankruptcy once before in 1999, but emerged the following year, when Value City, which later became Retail Ventures, bought its stores. (Reuters)
