Auction means uncertain future for Bon-Ton Stores
The Bon-Ton is in bankruptcy and may be headed for liquidation.
There is a court-scheduled auction of the company’s corporate assets set for Monday.
Bon-Ton Stores Inc. entered into Chapter 11 bankruptcy in February.
The company received a letter of intent this month from a group that said it would bid no less than $128 million and keep the business running. But, the group was requesting that Bon-Ton pay $500,000 to cover fees.
There are other bidders, according to the letter. Some were for only portions of the business. Four were for “substantially all of their assets.” Other than the group’s offer, all of the other bidders intended to sell off assets and wind-down the businesses, according to a letter.
An attorney on the case described the bid as “the last and only opportunity for the debtors to continue operating in business.”
The prospective bidder includes DW Partners — an alternative asset manager — and two real estate investment firms — Namdar Realty Group and Washington Prime Group.
Bon-Ton and the group were working out details in advance of the auction. The sale had initially been set for Monday, April 9. The group’s effort, according to the letter, would save “over 20,000 jobs” and preserve “a 120-year-old business that is a significant customer for its vendors, an anchor tenant for many of its landlords, and the leading hometown department store for millions of consumers in local communities throughout 23 states.”
The Bon-Ton has been an anchor store at Warren Mall since the mall opened in 1979.
A group of lien holders objected to the agreement in a court filing saying it is “clear that the debtors have no intention of running a fair bidding process, and are instead determined to select any potential ‘going concern’ buyer as the ‘highest and best’ bid without any regard for maximizing the value of the debtors’ estates for the benefit of creditors…”
The objecting group reportedly holds more than $220 million of the Bon-Ton Stores total debt of over $1 billion.
A federal bankruptcy judge rejected the agreement Wednesday, calling the $500,000 payment a “reimbursement of fees simply to get them to make a bid.”
Had the judge allowed it, the $500,000 deposit would “be used only to pay actual, reasonable, and documented third-party counsel and consulting fees and expenses,” according to the letter.
In January, Bon-Ton Stores, which is the parent company of a number of other brands, added 42 to stores to a list of five that it had already said would be closing in the early part of 2018. The Bon-Ton at Millcreek Mall was one of eight Pennsylvania stores on that list.
A representative of the Warren store directed media calls to the corporate office. A media contact at the company’s headquarters in Milwaukee directed the inquiry to the company’s latest press release regarding the letter of intent.