Sept. 18 (Bloomberg) -- Boscov's Inc., the bankrupt regional department-store chain, asked a judge for permission to designate buyout firm Versa Capital Management Inc. as the lead bidder to buy the retailer.

Versa proposed paying $11 million in cash and assuming Boscov's debt, according to a filing yesterday with the U.S. Bankruptcy Court in Delaware. The firm also intends to keep stores open at the almost century-old chain. Buyers in some bankruptcy auctions, such as that of home goods retailer Bombay Co., have shut all the stores and sold off all the assets without trying to salvage the business.

The emergence of Versa as the lead bidder means Boscov is less likely to become another casualty of the consumer-spending slowdown that led to the liquidation of Sharper Image Corp. and Wilsons the Leather Experts Inc.

``Boscov's has a few things going for them,'' Burt Flickinger, managing director of Strategic Resource Group, a New York retail consulting firm, said yesterday in a telephone interview. ``It has been a very well-managed chain that has come through five previous recessions. The competition doesn't know the local consumer nearly as well.''

The lead bidder on a bankrupt company's assets, also known as the ``stalking horse,'' is chosen by the company to make the first offer so that a minimum purchase price is set.

The Boscov family also has explored a bid to regain ownership of the Reading, Pennsylvania-based company, which filed for bankruptcy Aug. 4, according to a person with knowledge of the family's plans.

Leverage With Landlords

The buyer will be able to work out savings on leases with mall operators nervous about losing tenants, Flickinger said, turning some formerly unprofitable stores into money makers. ``Whether it's Versa or the family, they have tremendous leverage to renegotiate with the landlords,'' he said.

Founded in 1911, Boscov came under pressure as the collapse of the housing market and increased food and energy costs prompted consumers to curb spending. Its stores are concentrated in economically struggling communities in Pennsylvania and five other states.

Boscov's tried to absorb 10 former Macy's stores it bought from Federated Department Stores Co. just as consumer spending waned, Flickinger said. Tightening credit to buy goods also has hurt retailers, particularly regional merchants, which are ``the first to suffer,'' he said.

Boscov followed regional chains Mervyn's LLC, Goody's Family Clothing Inc. and a dozen other retailers into bankruptcy this year. At the time of the filing, Boscov, which had 9,500 employees, said it would immediately close 10 of its 49 locations.

Boscov's had sales of $1.25 billion last year, and at the time of its bankruptcy filing listed $538 million in assets and $479 million in debt as of May 3.

Versa was one of the buyers of Bob's Stores, the money- losing chain sold by TJX Cos. last month.

To contact the reporters on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net; Jonathan Keehner in New York jkeehner@bloomberg.net

Last Updated: September 18, 2008 00:01 EDT