Boscov's seeks OK to sell 39 stores

Chain entered Chapter 11 in August

Larry Thomas -- Furniture Today, September 22, 2008

WILMINGTON, Del. — Boscov's, the department store chain that filed for Chapter 11 bankruptcy protection last month, is seeking court permission to sell most of its stores to a private equity firm that would continue to operate the business.

In documents filed with U.S. Bankruptcy Court here, the retailer said it has signed a letter of intent to sell 39 of its 49 stores to Philadelphia-based Versa Capital Management.

Versa would pay $11 million for the stores, in addition to all secured, priority and administrative claims submitted in the Chapter 11 case, according to court documents.

Boscov's is conducting going-out-of-business sales at the other 10 stores, which will be closed in a few weeks, the company said.

The retailer told the court it needs to complete the sale prior to the start of the holiday selling season because it currently doesn't have enough merchandise for that busy sales period.

Versa is considered the "stalking horse" bidder in the case, but the court will conduct an auction involving Versa and any other qualified bidders on Oct. 13. A hearing to give final approval to the sale is scheduled for Oct. 15.

According to its agreement with Boscov's, Versa will receive a $4 million breakup fee if it is unable to complete the purchase.

In court filings, Boscov's said the deal has the backing of the unsecured creditors committee. La-Z-Boy, Serta and Sauder Woodworking are the largest home furnishings creditors, but none are represented on the committee.