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Bon-Ton files for bankruptcy protection

Bon-Ton Stores Inc. said Feb. 4 that it filed voluntary Chapter 11 petitions in U.S. Bankruptcy Court in Delaware to restructure its debt.

The U.S. department store chain said it intends to use the court-supervised process to explore potential strategic alternatives, which may include a sale of the company or parts of it under a reorganization plan.

The company's online and physical stores under the Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's and Younkers banners will remain open for business as usual.

Bon-Ton also noted that it is holding "constructive discussions" with potential investors and debtholders about the terms of its financial restructuring.

As expected, the company received a commitment from its existing ABL lenders for up to $725 million in debtor-in-possession financing, which is subject to court approval. The amount would allow the company to continue operating during the financial restructuring process.

The retailer also said it expects to receive bankruptcy court approval on several customary motions it filed seeking authorization to support its operations during the reorganization. These include the authority to pay wages and provide employee benefits and to pay vendors for all goods and services.

The company — which operates 256 stores from headquarters in York, Pa., and Milwaukee — plans to close 47 locations in 2018. Among these, it closed four in January, with another one near completion. On Feb. 1, it started closing sales at 42 outlets, which will last about 10 to 12 weeks.

In January, Bon-Ton posted a 2.9% year-over-year decline in comparable sales for the nine-week holiday shopping period ended Dec. 30, 2017.

Bon-Ton is now the first major U.S. brick-and-mortar retailer to file for bankruptcy in 2018. In 2017, 48 S&P Capital IQ-covered U.S. retailers with a primary or secondary consumer discretionary classification made bankruptcy filings, the most in six years.

AlixPartners LLP is Bon-Ton's restructuring adviser, while PJT Partners Inc. is acting as financial adviser. Paul Weiss Rifkind Wharton & Garrison LLP is the company's legal counsel.