LANSING, N.Y. — The retail apocalypse has claimed another victim. National department store chain Bon-Ton, which filed for Chapter 11 bankruptcy back in February, is expected to be liquidated in the coming months.
The only bidders in the court-supervised auction of the company Monday were a pair of bankruptcy liquidation specialists who manage going-out-of-business sales and the sale of assets. Once a liquidator is approved by the U.S. Bankruptcy Court in Delaware, the retail chain’s inventory, store leases, fixtures and intellectual property will be sold off to pay what it can to debtors (and with the liquidators pocketing a share of the proceeds). In other words, barring a surprise last-minute high bidder, Bon-Ton and its regional brands will soon cease to exist.
According to a report by Reuters, Bon-Ton had been working with U.S. mall owners Namdar Realty Group and Washington Prime Group Inc to secure a bid that would have kept open a large portion of Bon-Ton locations. Bon-Ton is a major tenant of both real estate firms, and its survival would have helped protect the property value of their malls, which depend on occupancy and long-term viability.
An example of that is right here in Tompkins County. Namdar Realty Group recently acquired the Shops at Ithaca Mall, of which Bon-Ton is a major tenant. Bon-Ton’s presence in Ithaca began at the mall in 1991 with the acquisition of local department store J.W. Rhodes from Pyramid Companies.
However, it appears that proposal did not pan out, with only the liquidators submitting bids at Monday’s corporate auction. “We tried very hard to identify bidders interested in operating Bon-Ton as a going concern, and I am extremely disappointed by this outcome,” said Bon-Ton CEO William Tracy in a letter to employees.
The closure of the Bon-Ton chain puts the long-term health of the Shops at Ithaca Mall into question. Village of Lansing officials have been aware of the closure prospect for a while, and as the $31 million mall is the biggest taxpayer in the village, officials have been working with the owners to try and keep the mall operational. “The Mall is failing and if this investor hadn’t come in they would have failed,” states the village Board of Trustee minutes from February.
Last fall, Namdar proposed and was granted a planned development area that would allow “creative redevelopment” of the mall, permitting more commercial uses like medical facilities, and allowing them to subdivide the mall and require the tenants of their larger spaces to buy their store locations. For example, the Michael’s space is for sale for $2.5 million, the Dick’s Sporting Goods/Best Buy/DSW Shoes/ULTA Beauty wing was subdivided and is up for sale for $12.6 million, and the Regal Cinema for $11 million. So far, the only large tenants willing to buy their spaces are Target, and a hotelier who wants to buy part of the mall parking lot behind the former Ramada Inn and develop it into a new extended-stay hotel.
Founded in 1898, Bon-Ton has long struggled in today’s highly competitive environment, squeezed by discount big box retailers on the low-end, specialty boutiques on the high end, and online retailers from just about every angle. According to retaildive.com, the chain’s sales have been falling since 2007, and it has not turned a profit since 2010.
About 254 stores and 20,000 staff in 24 states will be affected by the closure. The chain has sixteen stores in New York, and smaller stores such as Ithaca’s typically employ 40-50. Staff at the store said they could not comment on the matter, and a request for local employment total to a corporate office was not returned. A WARN notice for mass layoffs has yet to be filed with the state.