Boscov hopes to have chain back by Black Friday

Albert R. Boscov eyes a deal by the holiday.
Albert R. Boscov eyes a deal by the holiday.
Posted: November 19, 2008

Clearing the record: This article has been amended to correctly describe the relationship between Albert R. Boscov and Ken Lakin, the company’s chief executive officer. Lakin is Boscov’s nephew.


WILMINGTON - There were no fewer than 55 men in dark suits seated before U.S. Bankruptcy Judge Kevin Gross here yesterday, and 79-year-old Albert R. Boscov would have blended into the monastic monochrome if not for this: He was the only one on the edge of his seat. Literally.

Boscov - whose immigrant father founded the Boscov's department store chain 97 years ago - gripped the wooden bench in front of him as bankruptcy attorneys, one after another, said how eager they were for the 39-store chain to be rescued by week's end - and in time for Thanksgiving.

"It's through his tireless efforts that we're here today," attorney Claudia Springer told the judge before pointing to Boscov, her client.

The family offer that Boscov assembled himself is worth nearly $300 million - an eye-popping $100 million of that being cash from friends and family, Boscov revealed yesterday.

"That's enough to convince the court that we're for real," the retail hound from Reading said with a smile. His spunk and legendary charm gushed as he fielded questions from a knot of reporters during a recess from the sale hearing - his first public remarks about a deal sure to leave the most savvy dealmakers in awe.

If Judge Gross signs off on the asset-purchase agreement at a hearing Friday, Boscov's Department Store L.L.C. and its 8,000 mostly regional employees will stay in business. It would be a stunning result during an economic crisis that has taken out bigger and bolder retail chains in recent months, and during a time when few investors are willing to let go of any of their cash.

"We would like to be able to get the store back by Black Friday," Boscov said.

Black Friday marks the launch of the retail industry's most profitable few weeks. Banking the cash from heavy sales during that lucrative few weeks would help show vendors and customers that "a new company can flourish," Boscov said.

Officials said there were "loose ends" to tie up in the coming days.

"The contours of the deal are almost finalized," one of the company's lead bankruptcy attorneys, Brad Erens, told the judge.

Lawyers for the banks that hold Boscov's outstanding loans and who represent the vendors to whom the company owed about $90 million when it declared bankruptcy Aug. 4 told Gross they wanted the sale approved quickly. That means approval from the judge Friday so an agreement could be final next Wednesday.

"The lenders are willing to go by what the asset-purchase agreement says, which is November 26th" as the date the sale becomes official, said attorney David S. Berman, representing Bank of America Corp. and various other banks that supply Boscov's with credit lines to buy inventory, for example.

In testimony read into evidence yesterday, Albert Boscov's financial adviser, J. Scott Victor of NatCity Investments Inc., projected that the chain would turn a $12.7 million profit during its first year, compared with a loss of nearly $25 million logged about a year ago.

"Boscov's has always been a profitable company," Boscov later said. But executives had made a misguided decision to buy 10 new stores after Boscov and his brother-in-law, Edwin Lakin, now 85, retired from the helm in 2006.

It seemed like "the opportunity of a lifetime" to snap up a batch of stores once occupied by competitors such as Strawbridge's, Boscov said.

But it proved near-fatal. Those stores were unprofitable and became a drag.

The expansion into markets such as Western Pennsylvania and Maryland was led by Boscov's nephew Ken Lakin, 54, the company's chairman and chief executive officer.

"Baltimore, Maryland, thought Boscov's was a chocolate drink," Boscov told reporters, firing off zingers with flourish. "They didn't know what the hell we are.

"There was a mistake made," he said. The company sold its 10 least-profitable stores after filing for bankruptcy.

Ken Lakin and Boscov sat side-by-side in court. Lakin stood beside him as Boscov made jokes, told reporters wry anecdotes about his late father, and talked about how he wanted shoppers to be "excited" again about hunting through Boscov's.

"We're basically embarrassed by the Chapter 11," Boscov said. But the chain founded in 1911 by his father, Solomon Boscov, survived the Great Depression, a bunch of world wars and a batch of recessions. "We've always come out all right."


Contact staff writer Maria Panaritis at 215-854-2431 or mpanaritis@phillynews.com.

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