Retailer The Bon-Ton Stores Inc. is turning to bankruptcy court to sort out its financial troubles, a process that the company acknowledged could include its sale.
The company, which has dual headquarters in Milwaukee and York County, said Sunday night it filed Chapter 11 bankruptcy, which allows it to work with lenders and others in rearranging its financial burdens while it continues to operate.
Current lenders have pledged to lend $725 million to Bon-Ton, subject to court approval, to support operations during the bankruptcy process.
“We are currently engaged in discussions with potential investors and our debtholders on a financial restructuring plan, and the actions we are taking are intended to give us additional time and financial flexibility to evaluate options for our business,” said Bill Tracy, the company’s president and CEO.
Bon-Ton has suffered a string of financial losses and is in the process of closing 42 stores, nearly 20 percent of its total, including a store in Carlisle.
Those store closing sales, which began Feb. 1 and will run for about 10 to 12 weeks, are in addition to four stores closed in January and one store closing that is near completion.
The company said it is has been talking to potential investors and its debtholders regarding the terms of a financial restructuring plan. The options, designed to maximize value, include a potential sale of the company or some of its assets.
Sycamore Partners, a private-equity firm that recently acquired struggling office-supply chain Staples, expressed interest last year in buying some of Bon-Ton’s assets. Bon-Ton began over-the-counter trading in November after being delisted by the NASDAQ due to poor financial performance.
During the bankruptcy process, law firm Paul Weiss Rifkind, Wharton & Garrison LLP is acting as the company’s legal counsel, AlixPartners LLP is serving as restructuring adviser and PJT Partners, Inc. is acting as financial adviser.
Bon-Ton has filed a number of motions with U.S. Bankruptcy Court for the District of Delaware seeking authorization to support its operations during the restructuring process, including authority to pay wages and provide health and other employee benefits, and to pay vendors. The company expects to receive court approval for its requests.
The company operates 256 stores in 23 states under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers banners. In addition to the Carlisle store that is closing, there are six other Bon-Tons in Central Pennsylvania, including three in York County.