By  on April 11, 2012

Bankrupt Connaught Group has been sold in a bankruptcy court auction as a going concern to a joint venture called Forty-Three Eighty Co., whose winning bid is valued at more than $22 million.

The joint venture is comprised of Tom James Co., a men’s wear custom suit manufacturer, and Hong Kong-based Royal Spirit Group, Connaught’s largest vendor.

The transaction represents the first foray into women’s wear for Tom James. Royal Spirit was the primary manufacturer for Connaught’s Etcetera contemporary line.

According to Michael O’Hara, founder and chief executive officer of Consensus Advisors, Connaught’s financial consultant, the bid is comprised of $20 million in cash, $1 million in cash to be left with the bankrupt estate, plus $1 million for other items, such as lease assumptions.

“It is unclear at this point what the return will be to unsecured creditors,” O’Hara said, although he emphasized that the current expectation is that there will be a return to the unsecured creditors in the bankruptcy.

Connaught, founded in 1982 by William Rondina, filed for Chapter 11 bankruptcy court protection on Feb. 9 in Manhattan. It sold three distinct collections: Carlisle, Per Se and Etcetera. Each line is sold four times a year via 1,300 independent sales consultants through trunk shows.

The firm at its height hit $150 million in volume in 2007, but that had fallen to $108 million in 2010, according to court papers. Connaught has posted operating losses since 2008.

The joint venture has assumed the lease for the firm’s headquarters at 55th Street and Ninth Ave., suggesting that its operations will continue at its present location.

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