NEW YORK - Filene's Basement has asked a federal judge to sign off on a deal that the bankrupt department store chain said would eliminate about $70 million in claims held by its former parent Retail Ventures Inc and by DSW Inc.
Filene's, which filed for bankruptcy in May, submitted a settlement plan under which Retail Ventures would withdraw its claims to $52.6 million in unsecured notes it holds, according to court documents filed on Friday.
Retail Ventures would also assume responsibility for Filene's pension plan, which would otherwise leave Filene's with a liability of $13.3 million.
DSW, which provided Filene's with support services such as payroll, would reduce its claim by two-thirds to $446,667.
Under the terms of the proposed settlement, Retail Ventures would keep $11.7 million in general unsecured claims it accrued for items such as inventory and guarantees provided to landlords.
Filene's said that without the settlement, it and its creditors would otherwise end up embroiled in costly, bitter, and ultimately unproductive litigation and that the deal will allow unsecured creditors to recover significantly more than half of what they are owed.
Discount clothier Syms Corp and developer Vornado Realty Trust bought Filene's stores for $62.4 million at a bankruptcy auction in June.
The case is In re: Filene's Basement Inc, U.S. Bankruptcy Court, District of Delaware, No. 09-11525. (Reporting by Phil Wahba; Editing by Tim Dobbyn)