Bon-Ton Stores Inc. has secured a loan that could allow the department store operator to file for bankruptcy, Reuters reported Feb. 2.
With the loan, Bon-Ton could file for bankruptcy as early as Feb. 4, according to the report, citing "people familiar with the matter." The loan will allow the department store operator, which has about 260 stores and nearly $1 billion in debt, to operate throughout the bankruptcy process, the report said.
Bon-Ton did not respond to a request for comment from S&P Global Market Intelligence on Feb.2.
Bon-Ton would be the first major U.S. retailer to file for bankruptcy in 2018. In 2017, 48 S&P Capital IQ-covered U.S. companies with a primary or secondary consumer discretionary classification filed for bankruptcy — a six-year high.
Earlier in January, Bon-Ton posted a 2.9% year-over-year drop in comparable sales for the nine weeks ended Dec. 30, 2017, the critical holiday shopping period. On Jan. 31, the company announced the locations of 42 store closings.
The day that Bon-Ton could file for bankruptcy, Feb. 4, also marks the expiration of a forbearance agreement between Bon-Ton and its ABL Credit Agreement lenders, according to a Jan. 29 SEC filing. Under the agreement, certain Bon-Ton lenders agreed to not exercise any available remedies regarding a missed $14 million interest payment due in December.
The filing also outlined a restructuring plan.
