A US bankruptcy court has approved the sale of Boscov's to a family-held investment group led by Albert Boscov and Edwin Lakin who are both former executives of the department store chain.

"Today marks an important milestone in Boscov's restructuring and more importantly for the future of our company," said Ken Lakin, chairman and CEO.

He added that the sale agreement "maximises the value of our business and allows us to move forward with a solid financial base to establish a stronger and more competitive business."

The regional retailer, which has 39 stores and claims to be America's largest family-owned independent department store, filed to reorganise under Chapter 11 on 4 August.

It fell victim to the spending slump that has seen consumers cut back on discretionary spending and seek out bigger bargains at discount stores.

The stores' local focus has also made it difficult to strike deals for private label lines or exclusive merchandise brands.