By  on February 24, 2009

A court hearing in Manhattan bankruptcy court today will officially determine Fortunoff’s fate, but already the signs suggest a Chapter 11 liquidation.

A court filing last week indicates Fortunoff has inked a stalking-horse agreement with Gordon Brothers Retail Partners and Hilco Merchant Resources to conduct going-out-of-business sales at all stores. A second group of liquidators — Great American Group, Hudson Capital, SB Capital and Tiger Capital — was said to have submitted a competing offer to run GOB sales. An auction was being held Monday night.

Unless a buyer willing to purchase the retailer’s assets as a going concern emerges at the hearing, scheduled for 10 a.m.,the likely outcome is the liquidation of the 20-unit chain.

The agreement also allows the redemption of Fortunoff gift cards from the start of the GOB sales period until the close of business on March 8.

Fortunoff filed for Chapter 11 court protection on Feb. 5, its second tour of bankruptcy proceedings. It went into bankruptcy for the first time in early 2008. That filing enabled NRDC Equity Partners to purchase the $400 million business for $80 million, plus $30 million in debt and other obligations, in March 2008.

Fortunoff sustained dismal sales over the 2008 holiday season. For the nine months ended Nov. 30, the retailer’s net losses were $42.2 million on revenues of $260.1 million.

Earlier this month, the retailer laid off the bulk of its headquarters staff in Uniondale, N.Y., setting the stage for a liquidation of the 87-year-old jewelry and housewares chain.

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