Bankrupt Bon-Ton Stores races to find life-saving deal
12/03/2018 20:14
By Tom Hals
WILMINGTON, Del, March 12 (Reuters) - Bankrupt regional
department store chain Bon-Ton Stores Inc BONTQ.PK , under
pressure from a group of hedge funds to liquidate, began a race
on Monday to find a buyer to keep open some of its stores.
U.S. Bankruptcy Judge Mary Walrath approved sale procedures
on Monday and an April 2 deadline to accept bids for the chain,
which operated 256 stores when it filed for Chapter 11 on Feb.
4.
Bon-Ton has not yet received any initial bids, also called
stalking horse bids, which help stoke interest and attract
potential buyers to an auction it intends to hold on April 9.
The company faces a possible liquidation just as Toys 'R'
Us, the largest U.S. toy retailer, is preparing to go out of
business if negotiations do not produce a viable turnaround
strategy. urn:newsml:reuters.com:*:nL4N1QQ5Y8
Sales at many U.S. retail chains have tumbled in recent
years as more Americans shop online and as consumers
increasingly cut spending on apparel in favor of eating out and
other experiences.
Bon-Ton and its official committee of unsecured creditors
have been trying to round up a going concern bid backed by
vendors and landlords, two sources with knowledge of the talks
told Reuters.
A similar approach was used to prevent a liquidation of
Aeropostale Inc. The mall-based retailer was acquired by a
consortium that included landlords Simon Property Group SPG.N
and General Growth Properties GGP.N , whose properties contain
a combined 200 Aeropostale stores and sought to retain a key
tenant.
Bon-Ton, however, has lots of landlords and many that own a
single location, Kathryn Bufano, the company's former chief
executive officer, told Reuters. As a result, no single
landlord is heavily dependent on Bon-Ton, diminishing the appeal
of an Aeropostale-type bid.
"The vendor community and Bon-Ton's bankers are working to
see if the company can be salvaged," she said.
Six hedge funds that hold Bon-Ton's second-lien notes told
the company they want to team up with liquidator Great American
Group and wind down the business, their attorney Sidney Levinson
of Jones Day told the court on Monday.
Levinson argued that a liquidation was the best way to
squeeze the most value out of the company, which also operates
Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's
and Younkers stores.
Walrath reminded Levinson's group, which includes affiliates
of Brigade Capital Management and Contrarian Capital, that
Bon-Ton may consider the impact on landlords and employees when
valuing bids.
"No court has said 'highest and best' is solely dollars,"
she said.
(Reporting by Tom Hals in Wilmington, Delaware; Additional
reporting by Tracy Rucinski in Chicago; Editing by David
Gregorio)
((thomas.hals@thomsonreuters.com; +1 610 544 2712; Reuters
Messaging: thomas.hals.thomsonreuters.com@reuters.net))