In a letter to employees, Bon-Ton president and chief executive officer William Tracy said Tuesday afternoon that the long-struggling department store company will go out of business and close its stores within 10 to 12 weeks, according to reporting on Twitter by Mitch Nolen, a national retail and bankruptcy reporter who has been a contributor to Seeking Alpha.
Bon-Ton, which has corporate offices in Milwaukee and York, Pennsylvania, is the parent company of Boston Store. It filed for chapter 11 bankruptcy earlier this year. Bon-Ton has been trying to find a buyer that would acquire it out of bankruptcy and keep the company in business. A group of investors, that included two firms that own malls in the United States, signed a letter of intent expressing a desire to acquire Bon-Ton as a going concern. The deal, however, included a number of contingencies and required Bon-Ton to seek court approval for the company to pay a $500,000 work fee as the parties sought to finalize a purchase agreement. A bankruptcy court judge rejected that request, and the group and Bon-Ton were unable to work out a deal.
Then reports late Monday and earlier today by Reuters and Reorg Research indicated that the only bids moving forward in the Bon-Ton bankruptcy auction were from groups that want to liquidate the company.
“As you know, we have been working diligently (toward) a going concern acquisition of the company,” Tracy wrote to employees, according to Nolen. “Unfortunately, we have been unable to finalize an agreement, and it is with a heavy heart that I write to you today.”
According to Nolen, Tracy’s letter says that the court-supervised auction will be held Wednesday, “where we will ask the bankruptcy court to approve the sale of the company’s assets and the wind-down of operations.”
“At the court-supervised auction, we expect a liquidation bid will be determined to be the highest and best offer to maximize value for Bon-Ton’s stakeholders. … We expect to soon begin an orderly wind-down of operations,” Tracy wrote, according to Nolen. “We tried very hard to identify bidders interested in operating Bon-Ton as a going concern, and I am extremely disappointed by this outcome.”
The timing of the store closures will vary.
“Shortly following the court’s approval of the asset sale, we will begin our store closures and the liquidation of all inventory. We expect the store closure process to be completed in 10-12 weeks, with the timing of closures varying from store to store,” Tracy wrote, according to Nolen.
If Bon-Ton is liquidated and shut down, it would mean the end of one of Milwaukee and Wisconsin’s most iconic retailers. It also puts 2,255 Wisconsin employees out of work including more than 700 employees at Bon-Ton’s corporate office in downtown Milwaukee.
Earlier this month the company filed a notice with the state indicating that it would close 12 Wisconsin stores, and its Milwaukee corporate office, if it was not sold to a going-concern buyer. The notice said the company has 717 employees at its downtown Milwaukee corporate office, 243 at the Brookfield Square store, 201 at the Bayshore Town Center store, 191 at the Mayfair Mall store, 180 at the Southridge Mall store, 108 at the Regency Mall store in Racine and 52 at the Shops of Grand Avenue store in downtown Milwaukee. All of those stores would be closed and layoffs are anticipated to begin on June 5, according to the notice.
Earlier this year the company announced plans to close 42 stores, including nine in Wisconsin.
Nationally, Bon-Ton has more than 22,000 employees and 254 stores.
In addition to the loss of jobs, liquidation of Bon-Ton would create a massive amount of vacant retail real estate in the Milwaukee area, and the state.
According to CoStar data, there are nine Bon-Ton stores in southeastern Wisconsin occupying a total of 1.17 million square feet. The largest store is at Southridge Mall, 217,434 square feet, followed by the 215,450-square-foot Brookfield Square store.
“We are certainly disappointed with the outcome (of the Bon-Ton bankruptcy), but this is an opportunity to continue to evolve our properties through transformative anchor redevelopments,” said Stacey Keating, a spokeswoman for CBL Properties, which owns Brookfield Square. “We have been monitoring this situation closely and we have been working on contingency plans for each center impacted. We have several replacements under advanced negotiation.”
CBL has already been working on redevelopment plans for the former Sears space at Brookfield Square, which will include at Marcus Theatres BistroPlex and a Whirlyball entertainment establishment.
Bon-Ton did not respond to requests for comment on Nolen’s reporting of Tracy’s letter to employees.
A reporter for WISN-TV Channel 12, a media partner of BizTimes Milwaukee, spoke to some Boston Store employees Tuesday who said they had not yet heard anything official about the fate of the company.
“After operating our first store since 1854, I am saddened at the way the Bon-Ton story is coming to a close … I am honored to have led and served our customers alongside of you all … Thank you again for all of your outstanding work and dedication to Bon-Ton,” Tracy wrote, according to Nolen.
