Last updated on May 14th, 2019 at 04:03 am
Los Angeles-based Great American Group and New York-based Tiger Capital Group, which specialize in winding down retail chains, won the Bon-Ton bankruptcy auction with a bid estimated to be worth $775.5 million, according to a report from Reuters. Bon-Ton also issued a press release, with fewer details, acknowledging that Great American and Tiger Capital were the winning bidders.
The pair bid against other liquidators. The money raised from the auction will be used by Bon-Ton to repay its creditors. A portion of the winning bid came in the form of a credit bid, or when a creditor uses some of what they are owed instead of cash, sources told Reuters.
A U.S. Bankruptcy Court hearing will be held in Wilmington, Delaware on Wednesday to approve of the winning bid, clearing the way for the liquidators to begin selling store inventory, leases and fixtures.
The joint venture of Great American and Tiger Capital are the holders of Bon-Ton’s 8.0 percent second lien secured notes due in 2021, according to the press release from Bon-Ton. Great American Group and Tiger Capital Group will acquire the inventory and certain other assets of Bon-Ton.
“While we are disappointed by this outcome and tried very hard to identify bidders interested in operating the business as a going concern, we are committed to working constructively with the winning bidder to ensure an orderly wind-down of operations that minimizes the impact of this development on our associates, customers, vendors and the communities we serve,” said Bill Tracy, president and chief executive officer of Bon-Ton. “We are incredibly grateful to all of our associates for their dedicated service to Bon-Ton and to our millions of loyal customers who we have had the pleasure to serve as their hometown store for more than 160 years.”
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.
Great American and Tiger Capital had opposed the bid by the group that wanted to acquire Bon-Ton as a going concern.
In a letter to employees, Bon-Ton president and chief executive officer William Tracy said Tuesday afternoon that the company will go out of business and close its stores within 10 to 12 weeks, according to a national retail and bankruptcy reporter.
When Bon-Ton is liquidated and shut down, it will 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. See more about that local impact from WISN-TV Channel 12, a media partner of BizTimes 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.