Filene’s Basement files for bankruptcy, to close in 2012

By Jenn Abelson and Chris Reidy, Globe Staff

Filene’s Basement, the historic Massachusetts discounter, has filed for bankruptcy protection for the third time in just over a decade and will shutter for good after the holiday season. Filene’s Basement is owned by Syms Corp., which purchased the company out of bankruptcy in June 2009. Syms also filed for Chapter 11.

The liquidation of Filene’s Basement and Syms stores is expected to run through approximately January 2012, Syms said in a press release. The schedule for store closings is to be determined as the liquidation of merchandise is completed.

The demise of Filene’s Basement also means the end of its popular “Running of the Brides” event, where hundreds of frenzied brides-to-be rummage through racks of wedding dresses at discount prices.

In a statement, Syms chief executive Marcy Syms said that fierce competition, along with the “worst economic downturn in our lifetimes,” were among the reasons for the move.

“The filings today are the result of a process that has been taking place for several months,” Syms said. “Our board has conducted a rigorous assessment of all the strategic options and alternatives available and after careful consideration has come to the conclusion that a bankruptcy filing and liquidation is the best way of maximizing value for all stakeholders.”

Syms interim chief financial officer Gary Binkoski, in Chapter 11 documents filed today, said the brands have determined they are unable to reorganize on a stand-alone basis and concluded the “best way to maximize value ... is a prompt and orderly wind-down of the retail businesses that will capitalize on the upcoming holiday shopping business.”

Filene’s Basement has about 21 stores and roughly 1,555 employees, and a distribution center in Auburn, Massachusetts The Chapter 11 filing in US Bankruptcy Court in Delaware listed between $1 and $10 million in assets and between $50 and $100 million in liabilities.

The top creditor, with an unknown claim amount, is the Pension Benefit Guarantee Corporation. The brand Phillips-Van Heusen Corp. is owed nearly $850,000. Syms hired a financial advisor earlier this year to examine strategic alternatives.

This is the company’s third time around with the US Bankruptcy Court, which “is a highly unusual scenario,” according to Brandy Chestas, a senior editor at  New Generation Research, Inc, which runs bankruptcydata.com

But the filing is not exactly a surprise. In recent weeks, the chain has been announcing plans to shut some stores, such as two Filene’s Basement stores in Ohio and Maryland and four shops in Massachusetts. About 2 1/2 years ago, Filene’s Basement was purchased by Syms Corp. at an auction.

Before Filene’s Basement filed for bankruptcy in 2009, it shut down 11 of the chain’s locations.

Edward A. Filene founded Filene’s Basement more than a century ago as a way to sell excess merchandise from his father’s department store upstairs.

The basement pioneered the concept of bargains when it devised a system of automatic markdowns, where merchandise is discounted on a set schedule that customers can track. When Syms purchased Filene’s Basement at an auction, it promised to restore the historic clothing chain’s luster.

Syms chief executive Marcy Syms had said in past interviews that she was committed to bringing Filene’s Basement back to Downtown Crossing, where stalled construction has left a gaping hole at the site of the former Filene’s building. Now, the chain is closing.

Jenn Abelson can be reached at abelson@globe.com.