Retail Company Bon-Ton Files For Chapter 11 Bankruptcy
The future of Bon-Ton Stores looks tenuous after the department store chain that survived economic downturns including the Great Depression filed for bankruptcy protection and said it may seek a buyer for all or pieces of itself. Bon-Ton is the parent company of department stores such as Younkers and Herbergers.
The filing late Sunday makes Bon-Ton the largest retailer to file for bankruptcy so far this year. It joins several dozen others that filed for Chapter 11 last year, including Toys R Us, Payless ShoeSource and Gymboree Corp. More are expected to follow as many retailers face similar challenges, including big debt loads.
Bon-Ton, which runs 260 stores in 24 states, largely in the Northeast and Midwest, is in talks with debt holders about restructuring $1 billion in debt. Bon-Ton received a commitment of $725 million in debtor-in-possession financing to operate during its restructuring process.
“We are currently engaged in discussions with potential investors and our debt holders on a financial restructuring plan, and the actions we are taking are intended to give us additional time and financial flexibility,” CEO Bill Tracy said in a statement Sunday.
The company, which has dual headquarters in York, Pennsylvania, and in Milwaukee, is closing about 47 stores early this year in Wisconsin, Pennsylvania, Illinois, Indiana and elsewhere. Like other department store chains, it’s attempting to overhaul what they offer customers and how they get it to them.
Bon-Ton recently said it would accelerate that campaign as it tries to catch up with Kohl’s, Macy’s and JCPenney, which are devoting major resources to better compete online.
“Many of Bon-Ton’s stores were in areas where the availability of branded fashions and homewares was traditionally poor,” said Saunders. “However, while this once made them a focal point and a destination for local shoppers, the internet has done much to change this dynamic and has made the stores less relevant.”
Bon-Ton’s attempts to generate excitement in stores, such as opening FAO Schwarz toy shops in almost 200 stores, have mainly fizzled.
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