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<SEC-DOCUMENT>0001133796-06-000171.txt : 20061215
<SEC-HEADER>0001133796-06-000171.hdr.sgml : 20061215
<ACCEPTANCE-DATETIME>20060927152158
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001133796-06-000171
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20060927

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BLUEFLY INC
		CENTRAL INDEX KEY:			0001030896
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-CATALOG & MAIL-ORDER HOUSES [5961]
		IRS NUMBER:				133612110
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		42 WEST 39TH ST
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10018
		BUSINESS PHONE:		2129448000

	MAIL ADDRESS:	
		STREET 1:		42 WEST 39TH ST
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10018

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PIVOT RULES INC
		DATE OF NAME CHANGE:	19970305
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
                                                              September 27, 2006

VIA EDGAR AND FACSIMILE

Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Attention: H. Christopher Owings

Re:  Bluefly, Inc., Form S-3, File No. 333-136866, Filed on August 24, 2006 (the
     "Form S-3")

Dear Mr. Owings:

     Set  forth  below  are our  responses,  on behalf  of  Bluefly,  Inc.  (the
"Company"),  to the comments  contained in the letter of the staff (the "Staff")
of the Division of Corporation Finance of the Securities and Exchange Commission
dated September 12, 2006 to Ms. Melissa  Payner-Gregor,  Chief Executive Officer
of the Company (the  "Comment  Letter"),  with  respect to the  above-referenced
filing.  The numbered  responses set forth below correspond to the paragraphs of
the Comment Letter, which bear the same numbers.  For your convenience,  we have
repeated  the  Staff's  comments  below in bold  face  type  before  each of our
responses.  Except as  otherwise  indicated,  all  statements  contained  herein
concerning  factual  matters  relating to the  Company are based on  information
provided to us by the Company.  The Company  intends to file an amendment to the
Form S-3,  which will  include the revised  opinion  discussed  below,  upon the
resolution of the issues raised in the Comment Letter.

1.   WE  NOTE  THAT  THE  PROSPECTUS  RELATES  TO  THE  RESALE  BY  THE  SELLING
     STOCKHOLDERS OF UP TO 111,372,291 SHARES OF COMMON STOCK. WE ALSO NOTE THAT
     YOU CURRENTLY  HAVE  129,240,660  SHARES OF COMMON STOCK  OUTSTANDING AS OF
     AUGUST  22,  2006.  GIVEN  THE  NATURE  AND SIZE OF THE  TRANSACTION  BEING
     REGISTERED,  ADVISE THE STAFF OF THE COMPANY'S BASIS FOR  DETERMINING  THAT
     THE TRANSACTION IS  APPROPRIATELY  CHARACTERIZED  AS A TRANSACTION  THAT IS
     ELIGIBLE  TO   BE  MADE  ON  A  SHELF  BASIS  UNDER  RULE  415(a)(1)(i)  OF
     REGULATION C.

<PAGE>

                                                              September 27, 2006
                                                              Page 2

     The Company believes that this offering is a "true" secondary offering that
     is  eligible  to be made on a shelf  basis  under  Rule  415(a)(1)(i).  The
     limited  circumstances under which the Staff has taken the position that an
     offering styled as a secondary  offering is really a primary  offering made
     on behalf of the issuer entail situations in which the selling stockholders
     were  acting as a conduit  for the  issuer.  Relevant  factors  include the
     length  of time the  selling  stockholders  have  held  their  shares,  the
     circumstances under which the selling  stockholders  received their shares,
     the selling stockholders'  relationship to the issuer, the amount of shares
     involved,  and  whether  the selling  stockholders  are in the  business of
     underwriting securities.

     We do not  believe  that  the  facts  and  circumstances  involved  in this
     offering bear any resemblance to those outlined  above.  The following is a
     summary of the facts and  circumstances  surrounding  the  offering  of the
     shares by each selling  stockholder covered by the Form S-3, as well as the
     basis for the Company's  determination that each selling stockholder is not
     acting as a conduit for the Company.

     General

     All of the  proceeds  of the  offering  will  be  retained  by the  selling
     stockholders.  In addition,  although  the number of shares  proposed to be
     registered is large, it is important to look at the separate  circumstances
     surrounding the sale by each selling stockholder.

     Maverick and Prentice

     Entities associated with Maverick Capital,  Ltd.  ("Maverick") and entities
     associated  with  Prentice  Capital  Management,  LP  ("Prentice")  seek to
     register  the offer and sale of an aggregate  of  60,772,594  shares of the
     Company's  common  stock (the  "Common  Stock")  pursuant  to the Form S-3.
     Maverick and Prentice  purchased  such shares at a price of $0.82 per share
     in a private  placement  transaction (the "Private  Placement") on June 15,
     2006  (the  "Closing  Date").   The  purchase  price  of  $0.82  per  share
     represented  an 11% premium to the closing bid price of the Common Stock on
     the date of the signing of the definitive purchase agreement (the "Purchase
     Agreement")  for the Private  Placement.  Prior to the  consummation of the
     Private  Placement,  both Maverick

<PAGE>

                                                              September 27, 2006
                                                              Page 3

     and Prentice were  unaffiliated  with the Company.  In connection  with the
     Private Placement,  each of Maverick and Prentice were granted the right to
     designate  one  designee  to the Board of  Directors  of the  Company  (the
     "Board"),  pursuant to the terms of a Voting Agreement, dated June 15, 2006
     (the "Voting Agreement"),  by and among the Company, Maverick, Prentice and
     Soros.  The shares are being  registered  pursuant to  registration  rights
     granted to each of Maverick  and  Prentice in  connection  with the Private
     Placement.  No other agreement or understanding exists between the Company,
     on the one hand, and Maverick and Prentice, on the other hand, with respect
     to the registration of their shares.

     Neither   Maverick  nor  Prentice  are  in  the  business  of  underwriting
     securities  and each of Maverick and Prentice  represented  in the Purchase
     Agreement  that they did not  purchase  their shares of Common Stock with a
     "view towards  distribution" of such shares and that neither entity had any
     agreements or  understandings,  directly or indirectly,  with any person to
     distribute  its shares of Common Stock as of the Closing Date. In addition,
     pursuant to the Purchase Agreement,  Maverick and Prentice each agreed that
     for a period of six (6) months after the Closing  Date neither  would sell,
     offer to sell, solicit offers to buy, dispose of, loan, pledge or grant any
     right with respect to any shares of capital  stock of the Company (the "Six
     Month Lock-Up").

     Soros

     Entities  affiliated  with  Soros Fund  Management  LLC  ("Soros")  seek to
     register  the offer and sale an aggregate  of  50,836,681  shares of Common
     Stock  pursuant to the Form S-3. Soros has held such shares of Common Stock
     or, in the case of Common  Stock  issued  upon  conversion  or  exercise of
     preferred stock,  convertible  notes or warrants,  such shares of preferred
     stock,  convertible notes or warrants,  for a considerable  period of time.
     The newest issuance of such securities  occurred more than one (1) year ago
     and the oldest  issuance  of such  securities  occurred  more than five (5)
     years ago. Soros has been the largest  shareholder of the Company since its
     initial investment in the Company more than five years ago. Pursuant to the
     Voting  Agreement,  Soros has the right to designate three designees to the
     Board.  The shares  owned by Soros and  included  in the Form S-3 are being
     registered  pursuant to a registration rights agreement between the Company
     and Soros.  Although  Soros may be deemed to be an

<PAGE>

                                                              September 27, 2006
                                                              Page 4

     affiliate  of the Company  (which fact is not  dispositive  in  determining
     whether  the shares are being sold on behalf of the  Company),  the Company
     believes  that the  considerable  period of time that  Soros has held these
     securities,  the fact that Soros  agreed to the Six Month  Lock-Up  and the
     fact that Soros is not in the business of underwriting  securities provides
     a clear  indication  that Soros is not acting on behalf of the Company with
     respect to this offering.

     Portside; Allen & Company; Genesis Select Corporation

     Portside Growth and  Opportunity  Fund  ("Portside")  seeks to register the
     offer and sale of 203,206  shares of Common Stock pursuant to the Form S-3.
     Portside  acquired  such shares upon exercise of its  preemptive  rights in
     connection with the Private Placement. Portside has no right to designate a
     director  to the Board and its  shares  are being  registered  pursuant  to
     registration  rights  granted to  Portside in  connection  with the Private
     Placement.  No other agreement or understanding  exists between the Company
     and Portside  with  respect to the  registration  of its shares.  Given the
     nature of  Portside's  relationship  with the Company,  the small number of
     shares  being  offered by  Portside,  the fact that  Portside is not in the
     business of underwriting securities, the fact that Portside has not entered
     into any agreements or  understandings  with any person to distribute  such
     shares  and the fact that  Portside  agreed to the Six Month  Lock-Up,  the
     Company  believes  that  Portside is not acting as a conduit for the issuer
     with respect to this offering.

     Allen &  Company  LLC  ("Allen")  seeks to  register  the offer and sale of
     1,000,000  shares of Common Stock  pursuant to the Form S-3. Allen acquired
     such  shares as partial  payment  for the  placement  fee  payable to it in
     connection with the Private  Placement.  Allen is not currently  engaged by
     the  Company to perform any  services on its behalf.  Allen has no right to
     designate  a  director  to the Board and its  shares  are being  registered
     pursuant to  registration  rights  granted to Allen in connection  with the
     Private Placement.  No other agreement or understanding  exists between the
     Company and Allen with respect to the registration of its shares. Given the
     nature of Allen's relationship with the Company, the small number of shares
     being  offered  by Allen,  the fact that  Allen  has not  entered  into any
     agreements or understandings  with any person to distribute such shares and
     the fact that Allen agreed to the Six Month Lock-Up,  the Company  believes
     that,

<PAGE>

                                                              September 27, 2006
                                                              Page 5

     although Allen is in the business of underwriting securities,  Allen is not
     acting as a conduit for the Company with respect to this offering.

     Genesis Select Corporation ("Genesis") seeks to register the offer and sale
     of 100,000 shares of Common Stock pursuant to the Form S-3. Such shares are
     issuable  upon  exercise of a warrant (the  "Warrant")  that was granted to
     Genesis in  exchange  for  certain  services  performed  by Genesis for the
     Company.  Genesis has no right to designate a director to the Board and its
     shares are being  registered  pursuant to  registration  rights  granted to
     Genesis in connection with the issuance of the Warrant.  No other agreement
     or understanding exists between the Company and Genesis with respect to the
     registration of its shares. Given the nature of Genesis'  relationship with
     the Company,  the small number of shares being offered by Genesis, the fact
     that Genesis is not in the business of  underwriting  securities,  the fact
     that Genesis has not entered into any agreements or understandings with any
     person to  distribute  such shares and the fact that Genesis  agreed to the
     Six Month  Lock-Up,  the Company  believes that Genesis is not acting as an
     underwriter with respect to this offering.

2.   PLEASE DELETE THE DISCLAIMER  INDICATING THAT INVESTORS MAY NOT RELY ON THE
     OPINION WITHOUT COUNSEL'S CONSENT.

     We note the Staff's comment,  and have made the necessary deletion from the
     legal  opinion.  A copy of the  revised  form of legal  opinion is attached
     hereto as Exhibit A.

3.   WE NOTE THAT YOU HAVE  ASSUMED THE COMPANY HAS RECEIVED  CONSIDERATION  FOR
     THE ISSUANCE OF REGISTERED SHARES.  DISCLOSURE IN THE PROSPECTUS  INDICATES
     THE  COMPANY HAS  RECEIVED  CONSIDERATION  FOR THE  ISSUANCE OF THE SHARES.
     PLEASE RECONCILE OR REVISE THE OPINION AS APPROPRIATE.

     We note the Staff's  comment,  and have revised the legal opinion to delete
     the assumption regarding consideration. A copy of the revised form of legal
     opinion is attached hereto as Exhibit A.

4.   WE NOTE THE  STATEMENT  INDICATING  THAT  THE  OPINION  SPEAKS  ONLY OF THE
     GENERAL  CORPORATION LAW OF THE STATE OF DELAWARE.  PLEASE CONFIRM TO US IN
     WRITING THAT THE LEGALITY  OPINION  OPINES UPON  DELAWARE LAW INCLUDING THE
     STATUTORY

<PAGE>

                                                              September 27, 2006
                                                              Page 6

     PROVISIONS,  ALL  APPLICABLE  PROVISIONS OF THE DELAWARE  CONSTITUTION  AND
     REPORTED JUDICIAL DECISIONS INTERPRETING THOSE LAWS.

     We  note  the  Staff's   comment,   and  have  revised  the  legal  opinion
     accordingly. A copy of the revised form of legal opinion is attached hereto
     as Exhibit A.

5.   WE NOTE THE  STATEMENT  THAT THE  OPINION IS RENDERED AS OF AUGUST 24, 2006
     AND THAT YOU UNDERTAKE NO OBLIGATION TO UPDATE THE OPINION AFTER THIS DATE.
     PLEASE  BE  AWARE  THAT  THIS   OPINION  MUST  SPEAK  AS  OF  THE  DATE  OF
     EFFECTIVENESS OF THE REGISTRATION STATEMENT. PLEASE REVISE ACCORDINGLY.

     We note the Staff's comment,  and have revised the legal opinion to include
     an undertaking to update the legal opinion as of the date of  effectiveness
     of the Form S-3. A copy of the  revised  form of legal  opinion is attached
     hereto as Exhibit A.

          Should the Staff have any  additional  comments or  questions,  please
     direct such questions to the undersigned at (212) 649-8740.

                                                         Very truly yours,

                                                         /s/ Richard A. Goldberg
                                                         -----------------------
                                                         Richard A. Goldberg

cc:  Melissa Payner-Gregor
     Patrick Barry
     Jon Freedman
     Kara Jenny

<PAGE>

                                                                       EXHIBIT A

                             FORM OF DECHERT OPINION

_____________, 2006

Bluefly, Inc.
42 West 39th Street, 9th Floor
New York, NY 10018

Ladies and Gentlemen:

     On the date hereof,  Bluefly, Inc., a Delaware corporation (the "Company"),
intends to file with the Securities and Exchange Commission (the "Commission") a
Registration Statement on Form S-3 (the "Registration  Statement"),  relating to
the resale by certain  stockholders  of the Company of  110,665,647  shares (the
"Shares") of the Company's  common stock, par value $0.01 per share (the "Common
Stock"), and 706,644 shares of the Company's Common Stock issuable upon exercise
of  outstanding  warrants to purchase  Common Stock (the  "Warrant  Shares" and,
together with the Shares, the "Registered  Shares").  This opinion is an exhibit
to the Registration Statement.

     We have acted as special  counsel to the Company in connection with certain
corporate and securities matters,  and in such capacity we are familiar with the
various corporate and other proceedings  relating to the proposed offer and sale
of the Registered Shares as contemplated by the Registration Statement.

     In rendering  the  opinions set forth  herein,  we have  examined  executed
originals,  counterparts or copies of executed originals or counterparts of each
of the documents referenced below:

     (a)  the stock  purchase,  subscription  and other  agreements  pursuant to
which the Shares were issued;

     (b)  the agreements  evidencing the warrants  pursuant to which the Warrant
Shares will be issued;

<PAGE>

     (c)  the Company's  Certificate  of  Incorporation,  as presently in effect
(the "Certified Charter");

     (d)  the  Company's  Bylaws,  as  presently  in effect  (together  with the
Certified Charter, collectively, the "Certified Organizational Documents"); and

     (e)  the minutes and other instruments (the "Minutes")  evidencing  actions
taken by the Company's directors.

     As to certain  factual  matters  related to this  opinion  letter,  we have
relied upon the certificate of an officer of the Company.

     In rendering  the  opinions  set forth  herein,  we have  assumed,  without
independent verification or inquiry, the following:

          (i)    the authenticity of all documents submitted to us as originals;

          (ii)   the conformity to original  documents of all documents
submitted to us as certified, conformed or photostatic copies;

          (iii)  the genuineness of all signatures; and

          (iv)   insofar as this opinion relates to securities to be  issued  in
the future,  we have assumed that all applicable  laws, rules and regulations in
effect at the time of such  issuance  will be the same as such  laws,  rules and
regulations in effect as of the date hereof.

     Our  opinion  is  limited  to   applicable   provisions   of  the  Delaware
Constitution and the General Corporation Law of the State of Delaware ("Delaware
Law") and published judicial decisions  interpreting Delaware Law. We express no
opinion  with  respect to any other laws  (including,  without  limitation,  the
application  of the  securities  or "blue  sky"  laws of any  state to the offer
and/or sale of the Registered Shares).

     Based on the  foregoing,  and subject to and in reliance  upon the accuracy
and  completeness of the information  relevant thereto provided to us, it is our
opinion that,  subject to the  effectiveness of the  Registration  Statement and
compliance  with  applicable  state laws,  including  securities  laws,  (i) the
Registered  Shares (other than the Warrant

<PAGE>

Shares) have been legally issued and are fully paid and non-assessable, and (ii)
the Warrant Shares, when issued and paid for in accordance with the terms of the
applicable warrant, will be legally issued, fully paid and non-assessable.

     The opinion  expressed herein is rendered  pursuant to Item 601(b)(5)(i) of
Regulation  S-K under the  Securities Act and may not be used or relied upon for
any other purpose.

     We hereby  consent  to the  filing of this  opinion  as an  exhibit  to the
Registration Statement and as an exhibit to any filing made by the Company under
the  securities  or other  laws of any state of the  United  States in which the
Registered  Shares may be offered and sold.  In giving such  consent,  we do not
thereby  admit that we are in the category of persons  whose consent is required
under  Section 7 of the  Securities  Act of 1933,  as amended,  or the rules and
regulations of the Commission.

     This opinion is rendered to you as of the date hereof,  and we undertake no
obligation  to advise  you of any  change in any  applicable  law or in facts or
circumstances  which might affect any matters or opinions set forth  herein.  We
will,  however,  update  this  opinion  as of the date of  effectiveness  of the
Registration Statement.

                                                        Very truly yours,



                                                        DECHERT LLP
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