Bon-Ton Starts Going Out of Business

Bankrupt department store chain Bon-Ton has started going out of business with its 200 US locations after two liquidators won auction bidding for the company, according to sources.

Bon-Ton, which was established in as early as 1854, had tried to hope that a couple of landlords and a private equity firm would try to save the business by actively bidding at the auction.

However, sources claimed that the auction started without the landlord group.

Great American Group and Tiger Capital Group, whose expertise lies on winding down retail chains, won the auction with a bid of around $775.5 million, according to the sources familiar with the matter.

A part of the money raised through the auction will be allocated for the repayment of creditors. 

Meanwhile, another part of the winning bid was in the form of credit bid, which is when a creditor uses a part of his or her owning rather than cash. Bondholders’ credit bid contribution amount to at least $100 million to the value of the winning bid, the sources said.

The news of the company’s bankruptcy comes after Toys ‘R’ Us started a piecemeal liquidation of its stores and Babies ‘R’ Us. Bon-Ton has headquarters in York, Pennsylvania and Milwaukee.

On Wednesday, a US Bankruptcy Court will hold a hearing in Wilmington, Delaware to approve the winning bid, paving the way for the liquidators to start selling store inventory, fixtures, and leases.

Meanwhile, there’s still the possibility that a number of the stores will be taken over by another retail operator that may reopen the stores under one of Bon-Ton’s store names, which include Carson’s, Elder-Beerman, Youngkers, Boston Store, Herberger’s, and Berner’s.

“While we are disappointed by this outcome and tried very hard to identify bidders interested in operating the business as a going concern, we committed to working constructively with the winning bidder to ensure an orderly wind-down of operations that minimizes the impact of this development on our associates, customers, vendors, and the communities we serve,” wrote Bon-Ton CEO William Tracy in a letter to employees.

“We are incredibly grateful to all of our associates for their dedicated service to Bon-Ton and to our millions of loyal customers who we have had the pleasure to serve as their hometown store for more than 160 years,” Tracy added.

“We are certainly disappointed with the outcome, but this is an opportunity to continue to evolve our properties through transformative anchor redevelopments,” said Stacey Keating, who is the director of public relations and corporate communications for CBL Properties, which is the owner of East Towne, West Towne, Janesville Mall, and Brookfield Square.

“We have been monitoring this situation closely and we have been working on contingency plans for each center impacted. We have several replacements under advanced negotiations,” Keating added.

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