Men's Wearhouse drops bid for Filene's Basement

Men's Wearhouse drops bid for Filene's Basement
June 10, 2009 06:42 PM

Men's Wearhouse has dropped its $67 million bid to buy Filene's Basement and an auction for the bankrupt chain will be reopened on Friday, according to one of the losing bidders, Stanley Chera of Crown Acquisitions.

"The original winner is out. They're not bidding. They couldn't perform what they promised," Chera said.

Crown Acquisitions, the New York retail real estate firm which made the opening bid of $22 million in a joint venture with the Chetrit Group, is planning to raise its offer at Friday's auction.

Men's Wearhouse did not return calls seeking comment.

Syms, which failed with its $50 million offer at last week's auction, also is planning to enhance its bid to $63 million for 22 stores. The deal, a joint venture with New York real estate firm Vornado Realty Trust, will also include a quicker closing date than the fall date set by Men's Wearhouse, according to Alan Cohen, Filene's Basement chief restructing officer.

"We don’t know who else will show up on Friday," Cohen said.

Syms did not return messages seeking comment. Vornado, which owns the Downtown Crossing property where the shuttered flagship for Filene's Basement is located, did not return messages seeking comment.

A hearing was scheduled today to approve the $67 million sale of Filene's Basement to an affiliate of Men's Wearhouse. But it was delayed until June 19 as two of the losing bidders contested the validity of the auction on Friday.

Crown Acquisitions and Syms filed objections to the auction, calling it a "sham" and "brazen noncompliance," in separate court filings Tuesday. Both losing bidders challenged the timing of Men's Wearhouse proposal, which was submitted six hours after the deadline, included a closing date months later than the bidding procedures required, and involved a reorganization, rather than an asset sale

"It was a travesty," Crown Acquisitions said in court records seeking to block the transaction.

Syms president, Marcy Syms, said in court documents that Men's Wearhouse has "successfully perverted the auction process." Syms had submitted a bid valued at nearly $50 million.

After nine hours of intense bidding on Friday, K&G Acquisition Corp, the Men's Wearhouse affiliate, emerged as the successful bidder for the Burlington-based Filene's Basement, a month after the famed discount merchant filed for bankruptcy protection.

The $62 million purchase price covers the assets, including 17 to 20 of the store leases, inventory from all 25 existing locations, and leases for the company's headquarters in Burlington and a distribution center in Auburn. An additional $5 million is earmarked if Filene's Basement prevails in litigation over rent disputes with Vornado Realty Trust, the owner of the Downtown Crossing property where Filene's Basement's flagship store is based, according to a Basement official with knowledge of the deal who is not authorized to speak publicly.

(By Jenn Abelson, Globe staff)