July 17 (Bloomberg) -- Eddie Bauer Holdings Inc.’s bankruptcy auction was won by Golden Gate Capital, a San Francisco-based private-equity firm, with a $286 million bid and a plan to keep most of the outdoor-clothing chain’s stores open.

Golden Gate plans to keep a “substantial majority” of the retailer’s stores and employees, Bellevue, Washington-based Eddie Bauer said in a statement today. Golden Gate’s offer will be presented for court approval July 22, the retailer said.

The retailer attracted bidders ranging from Iconix Brand Group Inc., the New York-based owner of the Rocawear clothing brand, to liquidators Hilco Consumer Capital and Gordon Brothers Group LLC, said bankruptcy attorney David Pollack. Eddie Bauer, which opened its first sporting-goods store in Seattle in 1920, has about 370 stores in the U.S. and Canada.

“Creditors in general and landlords in particular should be happy,” said Pollack, a bankruptcy attorney with Ballard Spahr Andrews & Ingersoll LLP in Philadelphia whose clients hold leases on about 100 Eddie Bauer stores. Golden Gate agreed to keep at least 300 stores open, he said.

Affiliates of CCMP Capital Advisors LLC had agreed to make the initial $202 million bid after Eddie Bauer, based in Bellevue, Washington, filed for bankruptcy last month. As the court-approved stalking horse bidder, it will receive a $5 million breakup fee from Golden Gate, Pollack said.

Golden Gate didn’t assume any of Eddie Bauer’s debt, he said. It will take responsibility for some liabilities, such as the company’s leases, Pollack said.

Going Concern Vs Liquidation

CCMP, Iconix and Golden Gate were vying to buy the chain and keep it open, Pollack said. Great American Group LLC bid against a joint offer from Hilco and Gordon Brothers to buy Eddie Bauer’s merchandise and liquidate the company, he said.

Great American worked with liquidators Tiger Capital Group LLC, Hudson Capital Partners LLC and SB Capital Group LLC, said Pollack.

Iconix is considering its legal options after the auction, said Maria Dolgetta, a spokeswoman for the company.

“We were truly disappointed by the auction process and are considering our legal alternatives,” Dolgetta said in an e-mail.

The auction was a “win-win” for term lenders and the business, Gordon Brothers President Stephen Miller said in an e- mailed statement.

Representatives of Golden Gate, CCMP, Great American and Hilco weren’t immediately available to comment.

Second Attempt

The bid marks Golden Gate’s second attempt in almost three years to acquire the retailer. A $285 million offer from Golden Gate and Sun Capital Partners to buy Eddie Bauer failed to win majority approval from shareholders in 2007 after the retailer agreed in November 2006 to be acquired by them. The private- equity firms had also offered to assume $328 million in debt.

As of June, Eddie Bauer had 7,700 U.S. employees and another 933 workers in Canada, according to court documents. The company targets customers from 30 years old to 54 years old with an average income of $77,000, according to court papers.

“There’s some real value in the stores and in the brand,” George Whalin, president of Retail Management Consultants in Carlsbad, California, said in a telephone interview before the winner was announced.

Last month, Filene’s Basement Inc. won bankruptcy-court approval to sell its assets to a joint venture of Syms Corp. and Vornado Realty Trust. Circuit City Stores Inc. and Gottschalks Inc., the electronics seller and department-store chain, are among retailers that have filed for Chapter 11 protection over the past year as consumers cut spending in the U.S. recession. Both were liquidated.

Flight Jackets, Mountaineering

Catalog retailer Spiegel Inc. bought Eddie Bauer in 1988 and expanded the retail outlets, according to court records. By 2002, the company had grown to 501 retail and outlet stores from 61.

That growth diluted the company’s reputation as a provider of mountaineering and other cold-weather gear, Chief Financial Officer Marv Toland said in court papers. The company became famous for its flight jackets in World War II and coats used by the first American team to scale Mount Everest in the 1960s. It later became known for selling casual clothing to women.

“The feeling became much more like they were trying to be like everyone else in the mall,” Patty Edwards, a retail analyst and founder of Storehouse Partners LLC in Bellevue, Washington, said in a telephone interview. “They became muddled in the mire of mediocrity. They didn’t stand out anymore.”

In 2003, the company’s predecessor Eddie Bauer Inc. filed for bankruptcy along with Speigel. After leaving court protection in 2005, Eddie Bauer twice failed to sell itself.

Eddie Bauer hasn’t made an annual profit in three years and reported a $44.5 million loss in the first quarter on sales of $180 million.

The current bankruptcy was caused mainly by the high debt taken on during the previous bankruptcy case, Toland said in court papers.

The case is In re Eddie Bauer Holdings Inc., 09-12099, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporters on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net; Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net; Allison Abell Schwartz in New York at aabell@bloomberg.net.

Last Updated: July 17, 2009 17:58 EDT