AUCTION FAILS TO SETTLE WESTERN WEAR FIRM.

Byline: Jason Takenouchi Daily News Staff Writer

Workers and other creditors of a defunct retailer partly owned by Rep. Howard P. ``Buck'' McKeon got more disappointing news Thursday when an auction of the company's assets failed to result in a successful bid.

The company, Santa Clarita-based Howard and Phil's Western Wear, closed its remaining stores this month after struggling under a 1996 bankruptcy reorganization. Former employees from Fresno to Santa Ana have filed claims with the state alleging that the company paid them with bounced checks or failed to issue final paychecks.

The auction of the company's remaining inventory of clothes and boots, held Thursday in a downtown Los Angeles law office, was intended to pay part of the retailer's heavy debt.

But the auction stumbled after the highest bidder reportedly offered about $350,000 for the assets, far below their estimated retail value of $3.75 million to $4 million. Coast Business Credit, the largest creditor, threw out the bid.

``The bid received today was not adequate, and it was rejected,'' said Gary Samson, the attorney representing Coast Business Credit. ``We're exploring our options.''

As a secured creditor owed about $3 million, Coast has first priority on the assets, said Leslie Horowitz, lawyer for Development Specialists Inc., the firm acting as trustee for the Howard and Phil's estate.

``Until Coast is paid in full, no one else is going to get paid,'' he said.

Given the low bid, Horowitz said, employees and most other creditors of the failed company likely will not receive money when the assets are finally sold.

``It's pretty much certain the employees can't get paid from the estate,'' he said. ``We can't say for certain until we finalize everything, but based on the numbers it doesn't appear likely.''

That left some former workers fuming.

Steve Gehrt, former manager at the company's Burbank store, said he felt betrayed by Howard and Phil's and the McKeon family.

``I'm a mess,'' he said, ``and I'm not the only one.''

Gehrt is one of several former Howard and Phil's employees who say the company owes them for bounced paychecks and unissued final paychecks.

Five former employees have already filed state wage claims against the company, including one in Van Nuys that asks for $4,828.46 for work completed between April 1 and May 12.

Dean Fryer, spokesman for the state Department of Industrial Relations, said employers have an obligation to pay their employees even if the company goes bankrupt. If Howard and Phil's officials cannot work out the wage issues, Fryer said, the state may have to take the company to court.

Joseph McKeon, former Howard and Phil's president, said Thursday he was surprised to read in the Daily News that employees had not been paid. He said no employee had contacted him about it.

``Our understanding was that there were supposed to be funds set aside for the payroll,'' he said. ``If it's our responsibility, we'll assume it as best we can.''

Howard and Phil's was founded in 1962 and, at its peak, had 52 stores across the country, but there were only nine stores remaining when the company closed its doors this month.

Executives have blamed the company's decline on a downturn in the country wear market.

Howard McKeon has said he stopped taking part in the day-to-day operations of the business, founded by his parents, after his election to Congress in 1992, but a spokesman for the Santa Clarita Republican said he maintained his 20 percent ownership of the company.