MILWAUKEE — The only two bids at the start of a bankruptcy auction for department store chain Bon-Ton Stores Inc. were from liquidators, signaling the end for a company that at one time was part of the backbone of Wisconsin’s retail industry, according to reports Tuesday morning.
Reuters, citing two sources familiar with the matter, said Bon-Ton will go out of business without a bid from a going-concern bidder. The New York research firm Reorg Research, also citing sources, likewise reported that two liquidators were the bidders when the auction finally began late Monday night
Bon-Ton executives had hoped to find a buyer that would help turn around the fortunes of the retailer, which is the parent company of Boston Store, Younkers and other stores.
A Bon-Ton spokesperson couldn’t immediately be reached for comment Tuesday.
The auction is set to resume Tuesday morning in New York, Reorg Research said.
A judge in U.S. Bankruptcy Court in Delaware still must sign off on the prevailing bid. If she does, and it’s from a liquidator, the clock would begin ticking for more than 700 jobs at Bon-Ton’s downtown Milwaukee co-headquarters and more than 2,200 around the state.
The proceeds of the sale and liquidation of assets would go toward paying back lenders and creditors.
Bon-Ton hasn’t been profitable since 2010. Mall-based department stores have been among the hardest hit as traffic to malls has dropped off and more consumers order products from online retailers.
When Bon-Ton filed for Chapter 11 bankruptcy protection Feb. 4, management said it was striving to find a new investor or buyer for the company.
A Bon-Ton consultant contacted 28 potential investors this winter in an effort to restructure the company or sell it. It also contacted two groups of liquidators. The liquidators bid as early as January, but investors interested in keeping the company alive proved harder to find.
A group called the Official Committee of Unsecured Creditors, which represents employees and hundreds or landlords and vendors in the Chapter 11 case, has supported the efforts of management to sell the company to investors who would keep in going. In a court filing last week, the committee said the investor group that includes mall owners was “the last and only hope to save Bon-Ton from the fate of so many retailers that have filed for bankruptcy during this ‘retail apocalypse.’”
Although the Boston Store name has been part of Milwaukee for more than 100 years, Bon-Ton entered Wisconsin for the first time in 2003 when it purchased the Elder-Beerman department store chain, which had five stores in the state, for almost $93 million.
Bon-Ton’s big expansion in Wisconsin came in 2006, when it bought the Saks Inc. Northern Group, which was headquartered in Milwaukee, for about $1.05 billion. The Saks Inc. Northern Group included the Boston Store, Carson Pirie Scott, Bergner’s, Herberger’s and Younkers department stores.
The deal created what at the time was the second-largest department store chain in the U.S., with about 280 locations. Only Dillard’s, with 329, was bigger.
The merchandising and marketing units remained in Milwaukee — where Boston Store was started in 1897 — giving the city dual headquarters status with Bon-Ton’s York, Pa. home base.