Bon-Ton Stores, the corporate parent of several department store chains, tumbled into Chapter 11 bankruptcy protection as the company seeks a fresh lease on life.
Bon-Ton, whose brands include Boston Store, Carson’s, Elder-Beerman and Younkers, had been on a fast track toward bankruptcy court after it recently announced plans to close 47 of its 260 stores.
The retailer, felled by heavy debt and the digital fallout that has also ensnared many of its rivals, signaled that it’s conducting “constructive discussions” with its creditors to identify a viable path forward.
That could theoretically involve asset sales, significant debt cuts, additional store closures or some combination.
With some 24 million square feet of real estate and 23,000 employees, a liquidation of Bon-Ton would have sweeping implications.
Bon-Ton is aiming to keep stores open by selling the entire company, though retail bankruptcies often present the serious possibility of liquidation or a major downsizing.
The company has hired an outside agency to liquidate all of its assets if it can’t find a viable alternative, financial adviser James Baird said in a court filing.
Bon-Ton asked a federal bankruptcy judge to approve procedures for a potential sale of its assets or external investment to continue operations.
“There are multiple parties active in the process, including a number of merchants and landlords who have expressed interest in participating in a transaction,” Baird said.
The company’s stores are located in 24 states in the Northeast, Midwest and Great Plains. Bon-Ton has dual headquarters in New York and Milwaukee.
“The actions we are taking are intended to give us additional time and financial flexibility to evaluate options for our business,” Bon-Ton CEO Bill Tracy said in a statement.
The company has already secured up to $725 million in bankruptcy financing to continue operating.
Store closings at 42 locations announced Jan. 31 began on Feb. 1 and will take about 10 to 12 weeks. Four other stores have already closed and another one is near closure.
Bon-Ton Stores had about $1.59 billion in assets and $1.74 billion in debt as of Oct. 28.
The company’s top unsecured creditors include Estee Lauder, Hanesbrands, Keurig Green Mountain, Michael Kors, Perry Ellis and Ralph Lauren.
Like other retailers, the company blamed digital competition, nimble physical competitors and smartphone shopping for its demise.
The bankruptcy deals a blow to former Bon-Ton chairman and CEO Tim Grumbacher, who still owns 21% of the company’s common stock, according to court records.
The company traces its roots to before the Civil War, when its first store opened in 1854.