NEW YORK — VF Corp. and Kellwood Co. are both in the hunt for bankrupt Rock & Republic.

This story first appeared in the December 13, 2010 issue of WWD. Subscribe Today.

According to financial and market sources, the discussions have intensified over the last several weeks. Executives at both VF and Kellwood declined comment.

Both firms have taken a look at the distressed avant-garde premium denim brand before, but walked away because they wanted the assets, not founder Michael Ball. He is said to have wanted both an equity stake and a creative role in the reorganized firm, according to those familiar with the talks.

So what changed?

Sources said Ball lost his leverage when a $60 million deal with Bluestar Alliance, a private equity firm that has since morphed into a brand management firm, fell apart last month. That deal would have allowed Ball to remain in a continuing role with a restructured Rock & Republic. Executives at Bluestar could not be reached for comment.

“The numbers just didn’t work for myself and it didn’t work for them,” said Ball of the scuttled $60 million deal with Bluestar Alliance.

Now Rock & Republic is banking on plan B as its exit strategy from bankruptcy proceedings.

Financial sources said the bidders are eyeing a sale of the company for an amount south of $45 million, the amount that creditors are believed to be owed, meaning also that Ball’s equity stake will be wiped out and he’ll have no say in the company’s future.

“That’s why they came back in,” noted one investment banker.

“We are in advanced negotiations with at least two other parties,” said Geoffrey D. Lurie, chief restructuring officer of Rock & Republic. “This brand is in demand and there are a number of potential buyers who are, in fact, competing for this company.”

A deal with VF would make Rock & Republic the second company Lurie helped sell to the Greensboro, N.C.-based apparel giant. Lurie, a partner at consulting firm Lightship Partners and a veteran of turnaround situations, facilitated the sale of The North Face to VF in 2000.

Ball, who currently owns 100 percent of Rock & Republic, said he is considering deals that could see him step down from the company he founded. “The possible deals have ranged from me running certain parts of the business to me leaving,” he noted. “I developed and built this company and sometimes you want to allow your babies to go. It’s about what’s best for the brand and the company. I’m open to all offers.”

Ball said a deal could possibly be finalized “within weeks” and that he is aiming to have Rock & Republic out of bankruptcy by this spring.

“Right now the brand is strong and sell-throughs have been very good at retail,” said Ball. “We are profitable right now.”

He said Rock & Republic has overextended itself financially by investing in stores and launching a cosmetics line. “Try launching a cosmetics line and retail stores during the worst economic times since the Great Depression,” said Ball ruefully of the factors that led to the bankruptcy filing and putting the company up for sale.

The company filed a voluntary Chapter 11 petition in April in Manhattan, with the intent of finding an investor to pay off a $15 million loan secured by the firm’s intellectual property valued at $50 million that is owed to creditor Richard Koral.

Lurie acknowledged that Rock & Republic is under pressure to complete a deal quickly. “There isn’t a specific timeline, but no, time is not our friend,” he said.

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