Filene’s Basement, the “value-price” clothing retailer with stores throughout the United States, filed for bankruptcy on May 4, 2009 in Delaware.  According to its Affidavit in Support of First Day Motions (the “Affidavit”),  Filene’s Basement began 90 years ago as one of the first “off-price” stores where retailers and manufacturers could sell merchandise at substantially reduced prices.  By the mid-1990s, Filene’s operated 56 stores across the United States.  By the time it filed for bankruptcy, Filene’s was operating only 26 stores and looking to sell off assets.

Debtor’s Financials

Filene’s fiscal year ended January 31, 2009.  According to its Affidavit, Filene’s annual sales reached $422 million against operating losses of $53 million.  Going int to bankruptcy, Filene owes over $16 million under a revolving loan agreement and $52 million under unsecured subordinated promissory notes.  Filene estimates that it owes trade creditors approximately $30 million and has accrued expenses of $35 million.

According to Filene’s bankruptcy petition, its ten largest unsecured creditors are as follows:

  1. Cit Group Commercial … $4.4 million
  2. Best Buy Stores … $1.1 million
  3. Boston Globe … $879,503
  4. Phillips Van Heusen … $761,157
  5. Calvin Klein … $641,093
  6. DDR MDT Woodfield … $629,088
  7. Jone Apparel … $608,658
  8. Nautica Division … $433,184
  9. Federal Realty … $406,551
  10. Office Depot … $373,500

Objectives in Bankruptcy

Just days before filing for bankruptcy, Filene’s entered into an asset purchase agreement with Crown FB Acquisition LLC (“Crown”).  Pursuant to the agreement, Crown offered to buy 16 of Filene’s property leases and other related contracts.  Heading into bankruptcy, Filene’s intends to use the Crown offer as a stalking horse bid for the sale of Filene’s assets.  (To review a prior post on stalking horse bidders, click here).

Filene’s bankruptcy proceeding is before the Honorable Mary F. Walrath, former Chief Judge of the United States Bankruptcy Court for the District of Delaware.