(Reuters) – Bankrupt department store chain Bon-Ton Stores Inc (BONTQ.PK) said on Tuesday it received a winning bid from a joint venture, including Great American Group and Tiger Capital Group, to wind down its operations.
A joint venture of the holders of Bon-Ton’s 8.0 percent second lien secured notes due 2021, Great American Group LLC and Tiger Capital Group LLC will acquire the inventory and certain other assets of the company, Bon-Ton said in a statement.
“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,” Chief Executive Bill Tracy said in a statement.
Bon-Ton, which traces its roots to 1854, had hoped in recent days that a pair of landlords and a private equity firm would actively bid at the auction and try to save the business.
However, sources told Reuters on Monday that the auction started without the landlord group.
Great American Group and Tiger Capital Group, which specialize in winding down retail chains, won the auction with a bid estimated to be worth $775.5 million, according to two sources close to the situation. 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. Bondholders’ credit bid contributed at least $100 million to the value of the winning bid, according to the sources.
The failure of Bon-Ton, with headquarters in York, Pennsylvania and Milwaukee, comes weeks after Toys ‘R’ Us began a piecemeal liquidation of its namesake stores and Babies ‘R’ Us, the latest sign of upheaval in the retail industry.
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.
Throughout the court-supervised asset-sale process, Bon-Ton’s stores, e-commerce and mobile platforms under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers nameplates will remain open throughout the store closing sales, the company said.
It is possible some of the stores will be acquired by another retail operator that could reopen the stores under one of the Bon-Ton names.
The company’s stores include Carson’s, Younkers, Elder-Beerman, Bergner’s, Boston Store, and Herberger’s, as well as Bon-Ton.
(This version of the story has been refiled to remove extraneous article from first paragraph)