Boscov’s Inc., filed for Chapter 11 bankruptcy protection in Wilmington, Del., Monday, citing decreased consumer spending, Bloomberg News reports.
Boscov’s will immediately close 10 of its 49 stores, the news service reports, quoting court papers. The company said it will borrow as much as $250 million from a group of lenders led by Bank of America Corp. to help it restructure.
The collapse of the housing market and increased food and energy costs have led to “a decline in the discretionary spending by consumers upon which the debtors’ business depends,” Michael Hughes, Boscov’s executive vice president of capital development, reportedly said in court papers.
The department-store chain operates stores in six states and employs 9,500. It was founded in 1911 in Reading, Pa., and claims to be the biggest family-owned full-service department store chain in the U.S.
Boscov’s is seeking court approval of auction procedures for the selection of a liquidation firm to assist with store-closing sales, Bloomberg reports. It is requesting an Aug. 12 auction. The company said it will liquidate about $34 million in merchandise at the sales to be commenced by Aug. 15.
The retailer has an agency agreement with Gordon Brothers Retail Partners LLC for about $35 million and is seeking a $50,000 termination fee if Gordon Brothers isn’t the winning bidder, Bloomberg reports. Other bids must exceed Gordon’s bid by at least $75,000, according to court papers.
Boscov’s listed $538 million in assets and $479 million in debts as of May 3 in the court filing, Bloomberg reports. The company filed for bankruptcy protection with seven affiliates after failing to refinance its debt.
Boscov’s $250 million loan will consist of a $225 million senior revolving credit facility to be funded with as much as a $25 million “last out revolver advance,” Bloomberg reports.
The 40 largest creditors without collateral backing their claims are owed a total of $32.6 million, Bloomberg reports. The three largest unsecured claimholders are Jones Apparel Group Inc., owed $3.1 million; Kellwood, owed $2.6 million; and VF1, owed $1.3 million.
Photo of Boscov’s Binghampton, New York store byKai Brinker.