Becoming the latest retailer to bow to the challenging economy, Boscov’s Inc. filed for protection under the Chapter 11 bankruptcy code and plans to close 10 of its 49 stores. The largest family-owned independent department store chain in the U.S., based in Reading, PA, said the economy had caused consumers to spend less on discretionary items and that credit market conditions had caused vendors to tighten up.
Market observers also said the regional chain has been hurt by fierce competition from national chains like J.C. Penney, Kohl’s and Macy’s.
Boscov’s plans to use the bankruptcy to reorganize its debts and improve its finances. But the company also said in court filings that it is exploring all options, including a possible sale of the chain. The company has stores in six states, mostly in Pennsylvania.
In its filing in bankruptcy court in Wilmington, Delaware, the 97-year-old, mid-tier department store chain listed $538 million in assets and $479 million in debts as of May 3. The three largest unsecured creditors are Jones Apparel Group, owed $3.1 million; Kellwood, owed $2.6 million; and VF Corp., owed $1.3 million.
After the filing, Boscov’s received interim court approval for $250 million in bankruptcy financing from lenders led by Bank of America. The company also gained court approval to conduct an auction on Aug. 12 to select a liquidation firm to run store-closing sales at 10 “underperforming” stores.
Boscov’s move to Chapter 11 follows the bankruptcy of Mervyn’s, Steve&Barrys, Goody’s Family Clothing and Shoe Pavilion.