Syms wins battle for the Basement

Syms made the cash offer in a joint venture with Vornado Realty Trust, the New York real estate firm that owns the downtown Boston property where the Basement had operated.

It is not detailed in the plan, however, whether the merchant will again do business at that location, said Terry Corrigan of Abacus Advisors, the firm overseeing the Basement's restructuring. The flagship store has been shuttered since 2007 because of a stalled project by Vornado and another company to build a 39-story tower on the site.

"Syms is delighted at the outcome," spokeswoman Davia Temin said yesterday.

Vornado declined to comment.

"We're very pleased with the outcome. The chain continues. Employees will keep the vast majority of the jobs," Corrigan said.

The sale of Filene's Basement, which will be submitted to a US Bankruptcy Court judge tomorrow for approval, includes 22 stores, the Burlington headquarters, the Auburn warehouse, inventory, and the Filene's Basement name, Corrigan said.

The transaction, which is expected to close Thursday, covers leases in the Back Bay, Braintree, Newton, Watertown, and Downtown Crossing.

The Texas discount retailer Men's Wearhouse, in a joint bid with the New York retail real estate firm Crown Acquisitions, had in its most recent proposal offered nearly $65 million for about 20 stores. Under that plan, more landlords would be owed money, because fewer stores would be part of the sale and that lowered the value of their proposal, Corrigan said.

Men's Wearhouse and Crown Acquisitions could not be reached for comment.

Men's Wearhouse had been declared the winning bidder during the June 5 auction. But complaints filed by the losing bidders, including Crown Acquisitions and Syms, led a judge to reopen the process.

In her objection to the initial auction, Syms's chief executive, Marcy Syms, said the company had looked at Filene's Basement for more than two months.

"In an appropriately structured transaction, it might be possible to save the venerable Filene's Basement name from disappearing, save over 1,500 jobs, and save many retail locations from going dark while continuing the Filene's traditions and offering consumers another choice and a bargain in the process," Syms stated in court records. "Our bid ensures that a strong, regional company will also provide manufacturers with another formidable concentration in this market."

Like Filene's Basement, Syms sells discounted designer clothing. The New Jersey chain, which has 32 shops in more than a dozen states, opened its first store in New York City in 1959. Although Syms has experience with designer discounts, retail analysts say it is unclear whether the company will have success with Filene's Basement, which is emerging from bankruptcy protection for the second time.

Michael Tesler, president of Retail Concepts and an instructor at Bentley University, said it's hard to predict what Syms and Vornado will do with the Basement. He said Syms should try to resurrect the Filene's Basement of old at its Downtown Crossing store - the retailer that had loyal customers running to its stores in search of a good deal.

"I think there's a chance to recapture some of that culture," he said. "Now, will this be enough to turn traffic back? Only if they do an exceptional job and make the Basement even more of a Basement."

Mayor Thomas M. Menino said he had not spoken with Syms or Vornado, but he expressed hope that any deal would revitalize the retailer.

"I hope this will be an opportunity to bring that building back to its position in Downtown Crossing . . . to reopen there and to have a building that we're proud of," Menino said, adding that he used to shop there three or four times a week.

Filene's Basement was founded in 1909 by Edward A. Filene as a way to sell excess merchandise from his father's department store upstairs. The business expanded to nearly 56 stores in the mid-1990s, but ultimately had to pull back because it opened in markets where the brand was unknown and the merchandise was too similar to what other stores were selling.

By 2000, Filene's Basement had shrunk to 14 stores and filed for bankruptcy protection.

Over the past five years, new owners tried to turn around the brand with more upscale merchandise, fancier stores, and prime real estate, including on Newbury Street in Boston. But Filene's Basement struggled, and the mounting problems amid the economic downturn prompted the chain to file for Chapter 11 bankruptcy protection last month.

Jenn Abelson can be reached at abelson@globe.com; Erin Ailworth at eailworth@globe.com.