The group that is buying The Bon-Ton Stores out of bankruptcy will have until Aug. 31 to complete going out of business sales for the company’s roughly 250 stores, which includes the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers nameplates, according to newly filed court documents that outline details of the group’s bid for the company.
The buyer, a joint venture between Los Angeles-based Great American Group, New York-based Tiger Capital Group and a group of Bon-Ton debtholders, will be able to determine when going out of business sales start after the deal closes on Thursday at the latest.
Sales during the going out of business sale will be final. The group buying Bon-Ton will be required to accept returns for 10 days after the start of the going out of business sale on goods bought before the sale begins. Coupons will not be honored during the going out of business sale, but gift cards and credits will be honored for the first 10 days.
Bon-Ton, which has headquarters in Milwaukee and York, Pennsylvania, filed for bankruptcy in February. The company’s management sought to find a buyer that would continue operating the business. A group of mall owners and a private equity firm signed a letter of intent to potentially buy the business and keep it afloat, but a bankruptcy judge denied the payment of a work fee to help the deal move forward. The buyer group opposed the payment of the fee, arguing the bid procedures and case law didn’t allow for it.
After the deal fell through, the only remaining bidders were proposing to liquidate the company and the Great American/Tiger group won out. According to court documents, the group agreed to a deal worth $793.6 million for Bon-Ton’s assets, including:
- Up to $574.8 million as a cash purchase price to pay off certain financing and outstanding letters of credit.
- A $125 million credit bid, offsetting some of the $251 million in notes held by the group.
- $93.8 million in funding for wind-down operations.
The deal still needs final court approval. A U.S. bankruptcy judge in Delaware is considering the case today.
The group buying Bon-Ton will then be entitled to the proceeds of the going out of business sale. The group would also receive any remaining merchandise at the end of the sale and would be able to sell or dispose of Bon-Ton intellectual property, including logos and brand names.
In advance of the potential liquidation, Bon-Ton filed notices with state regulators regarding store closures. Those notices covered 2,255 employees in Wisconsin, including 700 at the company’s downtown Milwaukee headquarters. Nationally, Bon-ton has more than 22,000 employees.
The sale agreement allows the buyers to determine which employees will be needed for the going out of business sale. The group will be able to pay up to $7.4 million in retention bonuses or severance pay to employees who do not voluntarily leave employment and are not otherwise eligible for severance pay.
Spread across all 22,000 employees, the bonuses would amount to roughly $336 per employee, although every employee may not be retained and some are eligible for other severance payments.
The buyers are also able to decide to stop using any retained employees with seven days notice.
