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Filene's assets snapped up by Men's Wearhouse

June 09, 2009

Clothing retailer Men's Wearhouse has emerged victorious from a feverish nine-hour auction of assets belonging to off-price chain Filene's Basement, which fell victim to the retail market's downward spiral and filed for Chapter 11 bankruptcy protection in early May, just two weeks after its purchase by Buxbaum Group affiliate FB Acquisition II.

Acting through its affiliate, K and G Acquisition Corp., Men's Wearhouse put forth the winning bid of $67 million for 17 to 20 of Filene's store leases, as well as the leases on the company's Massachusetts corporate headquarters and distribution center, its Maryland storage facility and--possibly most important--the Filene's Basement trade name.
 
Men's Wearhouse's bid also covers inventory from all 25 existing Filene's stores, and, on the down side, a reserve of $5 million to address potential litigation involving Filene's lease for its flagship store at Boston's Downtown Crossing redevelopment project, which is presently at a standstill.

In addition to the downtown site, the 20-property lease portfolio includes four other locations in Massachusetts; five stores in New York; two each in Illinois, Maryland, Ohio and Washington, D.C.; one in Florida; and another in Georgia. On average, the stores feature approximately 30,000 square feet of selling space.

As for the Filene's locations not included in the lease grouping, their doors are scheduled to shutter by the middle of this month.

The fine-jewelry department at Filene's Basement stores is run by Chicago-based Ultra Stores Inc., which operates Ultra Diamonds stores and the licensed fine-jewelry departments in several off-price stores.

Ultra filed for Chapter 11 bankruptcy protection on April 9, with plans to reorganize and emerge quickly.

It is unknown at this point how Filene's situation might impact Ultra's plans.

The Men's Wearhouse bid for the Filene's assets is subject to approval by the Federal Bankruptcy Court in Delaware, which is scheduled to rule in a hearing on June 10.

Source: Commercial Property News with additional reporting by National Jeweler.
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