Buxbaum Unit Picks Up Filene’s Basement

Status of credit agreement still being worked out.

Filene’s Basement has been acquired by a new unit of the Buxbaum Group just days after being placed on the block.

Filene’s current parent, Retail Ventures Inc., won’t receive any proceeds from the disposition to Buxbaum’s FB II Acquisition Corp. It continues to guarantee the stores’ obligations under its secured credit agreement, which has a balance of $14.2 million.

A separate agreement has been reached with Filene’s unidentified lenders under which no demand would be made on the RVI guarantee until the lenders, “to the extent reasonably possible, have been able to be repaid by Filene’s Basement,” RVI said.

Alan Cohen has been appointed chief restructuring officer of Filene’s Basement, and Pachulski, Ziehl & Jones LLP has been retained as counsel. Cohen is chairman of Abacus Advisors Group LLC, a liquidation and appraisal firm.

Filene’s has had severe liquidity problems in recent months and RVI said last Thursday that the unit was officially on the block. However, many credit sources believed that the effort to sell the store might have come too late to avoid a bankruptcy filing by the off-price retailer, best known for its annual bridal gown sales.

In the announcement by RVI, which came late Tuesday, the parent firm said it was continuing to investigate options to enhance liquidity, including the possible sale or collateralization of shares of common stock of DSW Inc., the footwear subsidiary that isn’t a party to any of the guarantees involving Filene’s.

Filene’s Basement, founded in 1909 and acquired by RVI’s predecessor company, Value City Department Stores Inc., operates 25 locations. Value City, spun off from the corporate entity in early 2008, was later liquidated.