KPS Capital Partners LP is set to buy bankrupt Furniture Brands International Inc. for $280 million.

Judge Christopher Sontchi of the U.S. Bankruptcy Court for the District of Delaware in Wilmington approved Furniture Brands’ bidding procedures on Oct. 3.

The bidding procedures establish KPS affiliate, FBN Acquisition Holdings LLC, as the stalking-horse, or lead bidder, for Furniture Brands. Competing bidders would need to submit bids by Dec. 6. An auction is scheduled for Dec. 10, and a sale hearing to approve the winning bidder is scheduled for Dec. 12.

St. Louis, Mo.-based Future Brands designs, manufactures and sells lines of home furniture, including Thomasville, Broyhill, Lane, Crexel, Heritage, Henredon, Pearson, Hickory Chair, Lane Venture, Maitland-Smith, La Barge and Creative Interiors. The company filed for bankruptcy protection because of declining sales caused by the economic recession, according to court papers.

KPS, through an affiliate, is also providing Furniture brands with a $190 million debtor-in-possession loan. The debtor is heading to an Oct. 11 hearing to get final approval to use the loan.  New York-based KPS manages the KPS Special Situations Funds, a group of investment funds that have more than $6 billion in assets under management.

Furniture Brands filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington on Sept. 9. The company says in court papers that its sales depend on economic conditions, and their effect on home sales, construction and consumer spending.

As of June 29, 2013, the company had $547 million in assets and $550 million in liabilities. Furniture Brands also has unfunded pension obligations of about $200 million. Furniture Brands hired Goldman Sachs in 2011 to explore a sale, but potential buyers were concerned about the pension liabilities.

Proskauer Rose LLP is acting as KPS’ legal counsel for the deal.

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