Filene's Declares Bankruptcy, DSW in Trouble

Filene's Basement is seeking bankruptcy protection -- again.

The privately held discounter announced on Monday that it has filed for Chapter 11. The company also reached a deal that will allow a Crown Acquisitions affiliate to purchase 17 of its 25 stores, including its flagships in Boston and New York. The case is expected to head to bankruptcy court in about five weeks.

Last month, Buxbaum Group, a California-based liquidator, acquired Filene's from its previous owner, Retail Ventures. Retail Ventures, which also owns shoe chain DSW(DSW Quote), said Filene's has "significant liquidity problems."

If Buxbaum decides to shutter the stores, however, this could also be bad news for DSW. DSW allocated $5.7 million in shared services expense to Filene's Basement in 2009, according to its annual filing. As of January it was still owed $1.8 million from last year's shared-services contract. DSW also operated the footwear departments at Filene's Basement.

Filene's previously filed for bankruptcy on August 1999, when it was brought out of Chapter 11 by Retail Ventures.