The joint-venture combination of Syms Corp. and Vornado Realty Trust emerged victorious in the Filene’s Basement bankruptcy auction after coming up short in the first round, financial sources said.
This story first appeared in the June 16, 2009 issue of WWD. Subscribe Today.
Syms, the off-price chain based in Secaucus, N.J., and Vornado beat out the team of The Men’s Wearhouse Inc. and Crown Acquisitions with an offer of $62.4 million for 23 stores, sources said. Although Men’s Wearhouse and Crown bid more — $64.9 million — the Syms-Vornado proposition included more units.
Syms and Vornado were said to have bid $61.3 million when the proceedings ended without a resolution on Friday, and raised the amount by $1.1 million when bidding resumed Monday morning.
Court papers were not available at press time Monday. A hearing is scheduled for 5 p.m. on Wednesday in Delaware bankruptcy court to consider the winning bid.
Whatever the outcome of that session, the battle for Filene’s Basement is sure to be remembered as one of the longest-running and most complex in recent retail bankruptcy history, especially considering the relatively small size of the chain in comparison with recent bankruptcies, including Mervyns, Steve & Barry’s and Goody’s Family Clothing, all of which have been liquidated, and Boscov’s, which is being reacquired by the Boscov family.
Men’s Wearhouse, the Houston-based men’s wear specialty retailer, and Crown joined forces Friday and bid $67.7 million for Filene’s, which filed for Chapter 11 bankruptcy protection on May 4. At the time of the filing, Crown was designated as the stalking horse bidder when it offered $22 million for 17 of the chain’s 25 stores.
On June 5, K&G Acquisition Corp., an affiliate of Men’s Wearhouse, outbid both Crown and the Syms-Vornado team and appeared to be the winner of the Filene’s sweepstakes with a $67.7 million bid.
However, both Crown and Syms last week complained at a bankruptcy court hearing that the original auction won by Men’s Wearhouse failed to follow court-approved procedures. Syms chief executive officer Marcy Syms said she found the process “extremely disconcerting” and Crown described it as a “travesty.”
As the second round of the auction got under way, Men’s Wearhouse had teamed with Crown, despite the latter’s grievances about the earlier proceedings, and Men’s Wearhouse was seen as enjoying an advantage because of both its robust balance sheet and strong support in the financial community.
Vornado is the landlord of the stalled Downtown Crossing redevelopment project in Boston, where Filene’s planned to open a store. It’s been paying Filene’s $500,000 a month since January as compensation for not opening the store on schedule.