Bon-Ton Stores Inc. (BONT) has become the latest retailer to file for Chapter 11 bankruptcy protection as it grapples with massive debt and shrinking sales amid increased online competition.
The struggling regional department store chain said Sunday that along with its subsidiaries, it has filed voluntary petitions for a court-supervised financial restructuring under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.
Bon-Ton, which operates 256 stores in 23 states, added that it is currently engaged in "constructive" talks with potential investors and its debt-holders regarding the terms of a financial restructuring plan. The company has dual headquarters in York, Pennsylvania and Milwaukee, Wisconsin.
Bon-Ton said it has received a commitment from its existing ABL lenders for up to $725 million in debtor-in-possession or DIP financing to support its operations during the financial restructuring process. The DIP financing is subject to court approval.
The company intends to use the court-supervised process to explore potential strategic alternatives to maximize value for its stakeholders, including a sale of the company or certain of its assets as part of the reorganization plan.
Bon-Ton noted that its stores, e-commerce and mobile platforms under the Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's and Younkers nameplates are open and operating as usual.
Bon-Ton will continue with its previously-announced decision to close 47 stores in 2018. Four of these stores closed in January, while the closure of one store is near completion.
At the remaining 42 stores planned for closure, store closing sales began on February 1, 2018 and will run for about 10 to 12 weeks.
Bon-Ton has filed several customary motions with the Bankruptcy Court seeking authorization to support its operations during the financial restructuring process.
This includes the authority to pay wages to employees and to pay vendors for the goods and services provided on or after the Chapter 11 filing date. The company expects to receive Bankruptcy Court approval for these requests.
More than twenty retailers, including Toys R Us, Gymboree, Payless Shoesource, Bebe Stores, Rue21 and RadioShack, filed for bankruptcy protection in 2017.
by RTTNews Staff Writer
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