Bon-Ton Stores, one of the largest U.S. department store operators, has secured a loan that will allow it to file for bankruptcy protection as early as Sunday, according to people familiar with the matter.
The move will make Bon-Ton, which has about 260 stores and nearly $1 billion in debt, the first major U.S. brick-and-mortar retailer to file for bankruptcy this year.
Last year, more than 15 U.S. retailers filed for bankruptcy, the most in six years, as consumers moved more of their shopping online.
The loan will help Bon-Ton continue to operate in bankruptcy and carry it through a potential sale, the sources said. The size of the bankruptcy loan could not be learned.
The York, Pennsylvania-based retailer has also retained law firm Young Conaway Stargatt & Taylor for its filing, in addition to attorneys from Paul, Weiss, Rifkind, Wharton & Garrison, the sources added.
Bon-Ton declined to comment. Young Conaway and Paul Weiss did not respond to requests for comment.
Bon-Ton serves smaller communities in 26 states across the U.S.Northeast, Midwest and Great Plains under banners including Bon-Ton, Younkers, and Bergner’s.
Macy’s and competitors shuttering their stores has helped Bon-Ton in some communities it operates in, the retailer said in a business plan released this week.
The company had been looking for an investor to infuse new money into the firm ahead of a bankruptcy protection filing as part of a plan of reorganization, according to disclosures the company had made this week. Those plans called for the retailer’s $350 million in bonds to take the equity in a reorganized company.
The company’s bonds on Thursday were trading at about 15 cents on the dollar, according to Thomson Reuters data.
On Wednesday, Bon-Ton disclosed the 42 stores it will shutter across the country, with the bulk concentrated in Illinois, Indiana,Pennsylvania and Wisconsin.
In its business plan, Bon-Ton said its offerings in private label brands and e-commerce presence both need improvement to competes with the lines of Macy’s, Kohls, and JC Penney.