Members of the family that founded and ran the Boscov's department store chain for 97 years before it landed in bankruptcy in August reportedly have submitted a bid to buy back the business.
Albert R. Boscov and his brother-in-law Edwin A. Lakin are among the group that put in an offer for Boscov's Department Store L.L.C. in a bankruptcy auction that culminates next week with the selection of a winning bidder, Boscov said in a report published today.
The pair, who helped run the company for decades, received multimillion-dollar buyout packages when they retired in January 2006 and handed the controls to Lakin's son, chief executive officer Ken Lakin.
Boscov's, which anchors shopping malls across the Philadelphia region, filed for Chapter 11 bankruptcy protection Aug. 4. Its 49-store chain is being pared to 39 as part of bankruptcy proceedings.
Albert Boscov, who has declined requests for interviews since the filing, made his comments to the Reading Eagle, published in the city where Boscov is a prominent philanthropist and where the nation's oldest family-owned department store chain has its headquarters.
The chain, which produces $1 billion in sales annually, also is the longtime lead sponsor of the Thanksgiving Day Parade in Philadelphia.
Terms of the family offer were unknown. Calls to Ken Lakin and to attorneys for the chain and some of its creditors were not immediately returned.
It had been rumored for weeks that Boscov family members were considering assembling a bid to retain control of the company.
The only other known bidder is Philadelphia private-equity firm Versa Capital Management Inc.
Versa was named lead bidder in the federal bankruptcy proceedings when it put in an $11 million cash offer last month in an overall deal valued at more than $225 million.
Some creditors have viewed a family-owned bid as more attractive because of the family's long-held desire to continue operating the chain, rather than dismembering it by closing stores and liquidating assets.
Observers have said that for a competing bid to have a chance at prevailing, it would have to include at least $15 million in cash. That is because Versa has been promised a $4 million fee if its offer is not, ultimately, chosen under the U.S. Bankruptcy Court proceedings.
A successful buyer would also have to be able to produce financing to satisfy the banks holding sizable loans to Boscov's and that have considerable sway over bankruptcy proceedings.
If the Boscov family can come up with the financing needed to pass muster with the company's biggest banks, "this could be a tremendous deal for them," said Pittsburgh lawyer John C. Rodney, who specializes in bankruptcy buyouts with Thorp, Reed & Armstrong L.L.P.
Unsecured creditors who are also owned money, including clothing suppliers and the company that owns The Inquirer, were owed $90 million on Aug. 4, when Boscov's filed for bankruptcy protection.
Those creditors, who were prepared to receive a little more than 12 cents on the dollar under the Versa bid, expressed hope last month that a more generous competing bid would emerge as the auction proceeded.