Self-proclaimed billionaire Lynn Tilton has dumped one of her retail companies into bankruptcy to rinse it of its debts while maintaining control, according to an attorney for a leading creditor.

The Internet and catalog retailer of women's fashion, Signature Styles LLC, filed for bankruptcy late on Monday.

The business is part of Tilton's Patriarch Partners private equity firm. It plans to use bankruptcy to sell the business to another Tilton entity to satisfy the debts owed to yet another Tilton affiliate. Unsecured creditors such as suppliers may get nothing.

Lynn Tilton is basically saying, 'Look, I'm going to buy back the business and I'm going to strip it naked of all the unsecured liabilities. I'm going to rid it of everyone who is owed money behind me', said Kenneth Rosen, an attorney with Lowenstein Sandler PC, which represents Gould Paper Co of Davidsonville, Maryland.

Signature Styles owes Gould $1.3 million, making it a leading unsecured creditor.

The retailer owns the Spiegel, Newport News and Shape Fx brands and limped into bankruptcy court with just $50,000 in cash, less than it needs to make payroll, according to documents filed in Delaware's bankruptcy court.

The company is part of Tilton's private equity group, which has stakes in more than 70 companies, including mapmaker Rand McNally and cosmetic company Stila Styles LLC.

Tilton has made a name for herself by combining financial wizardry with a focus on rescuing struggling U.S. businesses. Her flowing blond hair and revealing attire have garnered media attention, although a recent Forbes investigation into her businesses raised questions about disclosure.

Others who advise creditors in bankruptcy also said the Signature Styles deal was almost certain to be investigated by creditors.

Anytime you have potential insider deals, they have to be scrutinized, said David Berliner, a partner with BDO Consulting in New York.

He said creditors will want to know if the sale is a sweetheart deal.

Rosen noted that Signature Styles is seeking court approval for the sale by early August, but only retained an investment banker to begin canvassing higher bids this month.

He also ticked off several criticisms, such as fees paid to a Tilton affiliate that is providing a $7 million bankruptcy loan and fees in the sale process that will be paid if someone outbids Tilton.

It's greed on top of greed, he said.

The company has proposed a sale for $30 million to lenders affiliated with Tilton who are owed about $36 million.

The sale is subject to higher bids and must be approved by a bankruptcy judge.

The sale at this time will not only maximize the value of the estates but will also likely ensure the preservation of more than 100 jobs, the court documents said.

Patriarch Partners' spokesman Richard White did not return calls seeking comment.

The company's liabilities of $87.6 million exceed its assets of $48.6 million, a situation that often means unsecured creditors such as suppliers will receive little if anything in the bankruptcy.

Signature Styles had a 2010 net loss of $31.1 million on sales of $119.9 million, according to court documents.

The bankruptcy filing is the second in eight years for Spiegel and Newport News, which along with the Eddie Bauer clothing brand were part of Spiegel Inc's bankruptcy in 2003. Eddie Bauer filed for bankruptcy again in 2009.

The case is In re Signature Styles LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-11733.

(Reporting by Tom Hals, editing by Bernard Orr)