General merchandise retailer Shopko Stores Inc. said Jan. 16 that the company, along with its subsidiaries, filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the District of Nebraska.
Green Bay, Wis.-based Shopko said the move comes in response to excess debt and "ongoing competitive pressures." In its bankruptcy court filing, the company listed estimated assets of between $500 million and $1 billion, and estimated liabilities of between $1 billion and $10 billion.
The move comes several weeks after multiple media outlets reported that Shopko had earmarked 39 stores for closure. Bloomberg News reported around that time that Shopko was set to file for bankruptcy protection if it failed to secure an out-of-court restructuring agreement.
In its latest announcement, Shopko said it will close 38 more stores, relocate more than 20 optical centers to freestanding locations and auction off its pharmacy business. It currently operates more than 360 stores in the U.S., which comprise 126 Shopko stores that also house optical and pharmacy services, five Shopko Express Rx neighborhood drugstores, six Shopko Pharmacy sites, four Shopko Optical locations and 234 smaller-format Shopko Hometown stores.
CEO Russ Steinhorst said in a statement: "In a challenging retail environment, we have had to make some very tough choices, but we are confident that by operating a smaller and more focused store footprint, we will be able to build a stronger Shopko that will better serve our customers, vendors, employees and other stakeholders through this process."
The company obtained up to $480 million in debtor-in-possession financing from certain secured lenders, led by Wells Fargo NA as administrative agent. That financing will be used to help fund and protect the retailer's operations during the bankruptcy process.
Shopko also said operations would continue as usual during the restructuring, which includes keeping its optical centers and pharmacies open.
Subsidiaries affected by the move include Specialty Retail Shops Holding Corp., SVS Trucking LLC, ShopKo Stores Operating Co. LLC, Shopko Properties LLC, ShopKo Optical Manufacturing LLC, ShopKo Institutional Care Services Co. LLC, ShopKo Holding Co. LLC, Shopko Gift Card Co. LLC, ShopKo Finance LLC, Retained R/E SPE LLC, Place's Associates Expansion LLC, Penn-Daniels LLC, Pamida Transportation LLC and Pamida Stores Operating Co. LLC.
Kirkland & Ellis LLP is acting as the company's legal counsel, with BRG serving as restructuring adviser and Houlihan Lokey acting as financial adviser.
Shopko, which was acquired by Florida-based private equity firm Sun Capital Partners Inc. for $1.1 billion in 2005, is the latest U.S. retailer to file for bankruptcy following Sears Holdings Corp., David's Bridal Inc. and Nine West Holdings Inc. in late 2018.