The chain of department stores is regional with its dual headquarters in York, Pennsylvania and Milwaukee, Wisconsin. It has struggled with growing sales and moving its operations to a digital format, while being hurt from a huge debt load.
The department store chain said it had been given a commitment of $725 million worth of debtor-in-possession financing by existing lenders that are asset-backed in order to support operations.
During the process that will be court-supervised, we will continue operations of the normal course while executing key initiatives to push improved performance, said Bill Tracy the CEO in a statement released by the company.
The company, which has 260 retail stores, recently outlined plans to close over 40 of its locations across the U.S. It stores operate under the banners of Herberger’s, Younkers, Elder-Beerman and Carson’s.
Tracy explained Sunday that the company was currently holding talks with possible investors and its debtholders on a restructuring plan for finances.
While in bankruptcy, Bon-Ton has said it will explore all strategic alternatives, including selling the company or specific assets as part of the plan of reorganization. That process will make it much easier for the business to enter into renegotiations on existing leases or ask for reductions in rent.
Bon-Ton recently posted poor sales for the all-important holiday season, despite many peers, such as Kohl’s, Macy’s and J.C. Penney doing quite well thanks to a strong economy.
Bon-Ton said that moving forward it would invest in private-label brands, refreshing its store layout, eliminating excess inventory and strengthening its online presence.
A retail analyst said that the reality of today is that while management at Bon-Ton put great efforts into making a sustainable business, they were running against the current.
The analyst added that a scaled down version of the business might survive, but first of all Bon-Ton needs to resolve that fact its products are unclear, undifferentiated and are increasingly less relevant to the consumer.
Over 20 retailers including Hhgregg, Toys R Us, RadioShack and Gymboree filed in 2017 for bankruptcy protection.
With another large amount of retail debut that comes due in 2018, there are several other chains that could follow Bon-Ton.