SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 23, 1999
Filene's Basement Corp.
(Exact name of registrant as specified in its charter)
Massachusetts 0-19149 04-3016733
(State or other juris- (Commission (IRS Employer
diction of incorporation) File No.) Identification No.)
40 Walnut Street
Wellesley, Massachusetts 02481
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 348-7000
Not Applicable
(Former name or former address, if changed since last report)
Item 3. Bankruptcy or Receivership.
On August 23, 1999, Filene's Basement Corp. and its wholly-
owned subsidiary, Filene's Basement, Inc. (collectively,
"Filene's") filed petitions for reorganization under Chapter 11
of the Bankruptcy Code (Case Nos. 99-16984 and 99-16985) in the
United States Bankruptcy Court for the District of Massachusetts,
Eastern Division (the "Bankruptcy Court"). A press release
regarding Filene's application for bankruptcy protection was made
on August 23, 1999 and is attached hereto as Exhibit 99.1.
Filene's will continue to operate on a business-as-usual
basis while restructuring and has received approval from the
Bankruptcy Court for "debtor-in-possession" interim financing.
In response to Filene's press release regarding its filing
for protection under Chapter 11, Nasdaq halted trading of
Filene's common stock on August 23, 1999. Trading will remain
halted pending receipt and review of additional information by
Nasdaq as set forth in Nasdaq's letter to Filene's, dated August
23, 1999. The Company will cooperate in providing the requested
information to Nasdaq.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Exhibit
99.1 Press Release, dated
August 23, 1999, announcing the filing
of a petition for relief under Chapter
11 of the Bankruptcy Code.
99.2 Letter from Nasdaq to
Filene's, dated August 23, 1999,
informing Filene's that trading of
Filene's common stock had been halted
and requesting additional information
regarding Filene's filing for protection
under Chapter 11 of the Bankruptcy Code.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: August 26, 1999 Filene's Basement Corp.
By: _/s/ Samuel J. Gerson________________
Name: Samuel J. Gerson
Title: Chairman & Chief Executive Officer
EXHIBIT INDEX
No. Exhibit
99.1 Press Release, dated August
23, 1999, announcing the filing of a petition
for relief under Chapter 11 of the Bankruptcy
Code.
99.2 Letter from Nasdaq to
Filene's, dated August 23, 1999, informing
Filene's that trading of Filene's common
stock had been halted and requesting
additional information regarding Filene's
filing for protection under Chapter 11 of the
Bankruptcy Code.
EXHIBIT 99.1
Filene's Basement Press Release
40 Walnut Street, Wellesley, MA 02481 (617) 348-7100
FOR IMMEDIATE RELEASE
Date: August 23, 1999
Contact: Steven R. Siegel, Executive VP/CFO
Telephone: (617) 348-7100
Facsimile: (617) 348-7130
The MWW Group
Public Relations - Tel. (201 507-9500
Carreen Winters ([email protected])
FILENE'S BASEMENT FILES VOLUNTARY PETITION UNDER CHAPTER 11 OF
UNITED STATES BANKRUPTCY CODE
Company Aims to Restructure Core Business, Accelerate Growth of
Aisle 3
Weekend-Only Concept
Wellesley, MA., August 23, 1999 - Filene's Basement Corp (Nasdaq:BSMT)
announced today that the company has filed a voluntary
petition with the United States District Court in Boston,
Massachusetts seeking relief under Chapter 11 of the U.S.
Bankruptcy code. The company cited a lack of trade support and
interruption in inventory deliveries as a primary factor for the
filing. During the reorganization process the Company will
continue to operate its business, which includes both Filene's
Basement and Aisle 3 stores, under court protection from its
creditors while developing a plan of reorganization.
Filene's Basement also announced that it has secured a commitment
for $135 million in DIP financing from General Electric Capital
Corporation and Paragon Capital LLC, subject to bankruptcy court
approval. The Company believes that this financing package will
provide sufficient funding to normalize inventory levels and
ensure a timely flow of merchandise throughout the reorganization
process.
"Despite our recently announced financing package, we continued
to experience difficulty in securing trade support, which
resulted in less than adequate merchandise delivery and
negatively impacted sales. With our store inventory below
optimal levels, we determined it was in the best interest of all
of our stakeholders to file for Chapter 11 in order to ensure
strong inventory positions prior to the holiday selling season
while providing the Basement with sufficient time and resources
to effectively restructure the business and position ourselves
for long-term success," said Sam Gerson, Chairman and CEO of
Filene's Basement. "We have begun a complete review of all areas
of our operations to leverage our core strengths while
establishing opportunities to improve efficiency and enhance the
company's performance in order to return the Basement to its
historical levels of prominence."
Prior to the filing, Filene's Basement began implementing
strategies to improve merchandising, operations and enhance
financial performance, including a reduction of headquarters
staff by 15%. The Company's Aisle 3 weekend only concept, which
currently operates in four locations, is showing strong signs of
success and the Company plans to open 4 additional stores over
the next 2 months
"The company has a long-standing tradition as one of the
strongest retail brands out there, and our customers equate the
Basement with terrific fashion at the sharpest prices," added
Gerson.
"We must work to deliver on that promise, every day, in every
store, while fueling the growth of our Aisle 3 concept which we
believe meets the lifestyle needs of a broad range of consumers
and will be a strong contributor to our future."
The Company's bankruptcy counsel is Hale & Dorr.
Filene's Basement operates 51 traditional Filene's Basement
stores and four Aisle 3 weekend warehouse stores, primarily in
the Northeast and Midwest. Filene's Basement corp., operates
stores that offer focused, quality, branded assortments of men's
and women's apparel, at prices generally 20-50% below department
and specialty store regular prices.
EXHIBIT 99.2
[NASDAQ AMEX LETTERHEAD]
VIA FACSIMILE AND MAIL
August 23, 1999
Mr. Steven R. Siegel
Executive Vice-President and Chief Financial Officer
Filene's Basement Corporation
40 Walnut Street
Wellesley, MA 02481
Dear Mr. Siegel:
We have received the August 23, 1999 press release (the "Press
Release") issued by Filene's Basement Corp. (the "Company")
announcing that the Company has filed a voluntary petition to
reorganize under Chapter 11 of The United States Bankruptcy
Code(the "Filing"). Based on our review of the Press Release, we
determined to halt trading in the Company's common stock pending
receipt and review of additional information. The additional
information is requested in accordance with Marketplace Rules
4330(c) and 4450(f) of the Nasdaq Stock Market.(Footnote 1)
Our decision to request this information is based on:
- - potential public interest concerns relating to matters herein;
- - the potential negative impact of the reorganization on the Company's
shareholders;
- - whether the Company has the ability to generate sufficient cash flow
to fund operations and repay its obligations; and
- - whether the Company has the ability to demonstrate sustained compliance
over the long-term with all continued listing requirements for inclusion
on The Nasdaq Stock Market.
Please provide a detailed response to the following items:
1. Include a narrative detailing the proceedings surrounding
the Filing, the anticipated timing of effectiveness for the plan
of reorganization, and the effect on the current shareholders of
the Company. Include copies of all submissions to the Court.
Please also enumerate the specific terms of the reorganization
and define the scope of jurisdiction the Court will retain over
the Company's assets and operations.
(1) Marketplace Rule 4330(c) states that Nasdaq may request any
additional information or documentation, public or non-public,
deemed necessary to make a determination regarding a security's
initial or continued inclusion, including, but not limited to,
any material provided to or received from the Commission or other
appropriate regulatory authority. Information requested pursuant
to this subparagraph shall be submitted within a reasonable
period. Marketplace Rule 4450(f) states that should an issuer
file under any of the sections of the Bankruptcy Act or announce
the liquidation has been authorized by its board of directors and
that it is committed to proceed, Nasdaq may suspend or terminate
the issuer's securities unless it is determined that the public
interest and the protection of investors would be served by
continued designation.
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2. Provide an internal balance sheet and statement of
operations reflecting the financial position of the Company at
the time of or subsequent to the date of the Filing.
3. Provide a historical summary of events leading up to the
Filing, including management's assessment and analysis of the
events leading up to the filing.
In order to complete our review and to make a determination
concerning the trading status of the Company's common stock, the
Company must respond in writing BY SEPTEMBER 2, 1999 to the
issues enumerated above. Please be specific in responding and
provide supporting documentation where possible. Please number
your responses to correspond with the applicable question number.
Upon review of this information, the staff may request additional
information or take any action that may be appropriate under the
Marketplace Rules, including removal of the Company's securities
from the Nasdaq Stock Market in accordance with Rule 4300 and
Rule 4330(a)(3).(Footnote 2) We invite you to submit additional
information if you feel this would assist the staff in its review
of the Company.
Should the Company fail to submit the necessary information in
the time frame set herein, or if the submission is deemed not to
warrant continued listing, the staff will immediately send formal
notice of deficiency and commence the delisting process. Please
note, no delisting action would be taken until the Company has
had adequate time to respond to said formal notice.
All companies operating under bankruptcy proceedings are
identified by the fifth character "Q" appended to their trading
symbol(s). Accordingly, the trading symbol for the Company's
common stock will be changed from BSMT to BSMTQ effective
tomorrow, August 24, 1999.
If you have any questions relating to the compliance issues
discussed above, please contact Jason Rosenberg at 202.496.2679.
Sincerely,
/s/ Victoria Carrai
Victoria Carrai
Associate Director
Nasdaq Listing Qualifications
(2) Marketplace Rule 4300 states that the Association will exercise
broad discretionary authority over the initial and continued
inclusion of securities in Nasdaq in order to maintain the
quality and public confidence in its market. Under such broad
discretion and in addition to its authority under Rule 4330(a),
the Association may deny initial inclusion or apply additional or
more stringent criteria for the initial or continued inclusion of
particular securities or suspend or terminate the inclusion of
particular securities based on any event, condition, or
circumstance which exists or occurs that makes initial or
continued inclusion of the securities in Nasdaq inadvisable or
unwarranted in the opinion of the Association, even though the
securities meet all enumerated criteria for initial or continued
inclusion in Nasdaq. Marketplace Rule 4330(a)(3) states that the
Association may, in accordance with Rule 9000 Series, deny
inclusion or apply additional or more stringent criteria for
initial or continued inclusion of particular securities or
suspend or terminate the inclusion of an otherwise qualified
security if the Association deems it necessary to prevent
fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, or to protect investors and
the public interest.
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