Judge approves sale of bankrupt Boscov's to family-led group

By E. Janene Geiss

Wilmington, Del., Nov. 21 - The sale of Boscov's Department Store LLC department store to family-led group that arranged the $300 million sale to save the chain from liquidation was approved Friday by the U.S. Bankruptcy Court in the District of Delaware.

"This sale benefits a number of constituents," said judge Kevin Gross at the hearing.

Debtors, landlords, employees and the communities where the Boscov's stores are located will be best served by the deal, judge Gross remarked.

The deal is valued at roughly $275 million to $300 million, according to a spokesman for the Boscov family. That money will come from three branches of the family, led by Albert Boscov and Edwin Lakin, along with senior loans being contributed by lenders.

The cash component of the plan is $3 million, according to court documents.

Unsecured creditors are slated to get $8 million in the settlement from the family group and bankruptcy creditors will get a $7.7 million tax refund.

"$8 million comes in, the sale gets consummated and the family can go on to operate Boscov's in a successful way," Richard Kanowitz of Cooley Godward Kronish LLP in New York, attorney for the unsecured creditors committee, told the judge.

The deal is expected to close Nov. 26.

A previously announced purchase agreement with Versa Capital Management, Inc. was terminated when the family deal was announced on Nov. 4. But Versa's lawyers attended Friday's hearing to protect their rights to receive a $4 million break-up fee. That issue will be resolved at a later date.

Now that the sale is approved, the company also is eligible for $35 million in federal loans obtained by Pennsylvania governor Ed Rendell through a program that allows governments to guarantee loans for economic development. The deal protects about 7,500 jobs with 5,000 of those jobs in Pennsylvania.

"It really helped fill in a gap with lending in a really tough lending environment," Ken Lakin, Boscov's chief executive, told a crowd of reporters after the hearing.

Putting together the financing during the current credit crisis was a challenge, but company officials said they worked tirelessly to make a deal in time for the busiest shopping day of the year, the day after Thanksgiving known as Black Friday, Lakin said.

"This is the time of year for miracles and Al Boscov is a miracle maker," he said.

Lakin would not comment on whether he will stay on in the new company as chief executive officer. But he did say the company will work out a new leadership structure within the next 90 days.

Boscov's, a Reading, Pa.-based regional department store chain, filed for bankruptcy on Aug. 4 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 08-11637.

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