Retail Detail Update. Bidding Battle Continues As Filene’s Losers Fight Back

June 11, 2009 • Shopping


Following the announcement yesterday of Men's Wearhouse victory in the race to obtain many of the bankrupt Filene's Basement leases, the other contenders are playing the sore loser. Beat out bidders Crown Acquisitions and Syms Corp. filed objections today against the $67 million sale of Filene's Basement to an affiliate of Men's Wearhouse, K&G Acquisitions. Reps for both companies demanded a hearing to express their grievances, which will be held today in a Delaware bankruptcy court.

Crown's complaints are that the winning bidder neglected to submit an offer within the bidding deadlines, calling the entire auction a "travesty". The acquisitions company is also claiming that the the debtor wasn’t adhering to court-approved bid procedures, which is why the company seemingly refused to bid higher after it's initial $22 million offer. In a tantrum befitting of an angry child, Crown went on to blast Syms as a potential leasor, saying the retailer did not possess the financial clout to own the bankrupt properties. Syms' business partner in the deal, Vornado Realty Trust was also seen as unfit to own Filene's according to Crown, who stated that Vornado is in, “default for millions of dollars of obligations owed to the debtors.”

In a cavalier attempt to ignore Crown's tempers, Syms representatives focused on the procedures of the auction which they deemed as unfair. Syms agreed with Crown that court-approved bidding procedures were not demonstrated and that at one point in the auction, Syms did have the highest bid. The company claims that the only reason it kept bidding despite the lack of proper procedures was because it "risked being illegally excluded by the [unsecured creditors’] committee and the debtors from the auction if it did not bid.”

Both parties have surprised many with the ferocity and vehemence in this matter and it will be interesting to see what grievances, if any, will actually be heard. In between one temper tantrum and one sob story the delegates at the hearing today are surely in for one heck of a show. Bob Carbonell, executive vice president and chief credit officer
at Bernard Sands Credit Consultants seems to agree. Yesterday he said, “In my 40 years in credit, I
have never seen such a vociferous objection to a Chapter 11 bid. It
must have been a heck of (an auction and the hearing to approve the
sale) should be worth selling tickets to.”

Article Source: WWD
Photo Source: The Boston Herald
-Alia Rajput

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