Bankruptcy Court Signs Off on Boscov’s First-Day Motions
- Aug 07, 2008
Boscov’s Department Store L.L.C. just announced that the United States Bankruptcy Court for the District of Delaware has signed off on the Reading, Pa.-headquartered company’s first-day motions, which were heard on Aug. 5. Sidelined by a souring economy that has put a damper on retail sales, Boscov’s filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code earlier this week. As part of its restructuring effort, the company plans shutter the doors of 10 of its 49 stores. Paving the way for Boscov’s to return to a healthy relationship with its vendors and keep the merchandise rolling in, the court granted interim approval for the retailer to access its $250 million Debtor-in-Possession financing. The court will conduct a hearing later this month, during which Boscov’s expects to receive the final green light to tap into the financing from Bank of America. Other orders granted will fund the payment of employee salaries, healthcare benefits, 401(k) contributions and other worker programs. Boscov’s will also be able to continue its facilitation of various customer programs. Additionally, the court also gave the go-ahead for auction procedures for the selection of a liquidation firm that will assist the company with store-closing sales at the 10 struggling locales it has decided to close. Operations are scheduled to cease at five stores in Pennsylvania, three in Maryland, and one each in New Jersey and Virginia. The downturn in the economy has hit most sectors of the retail industry hard. The average national vacancy rate for retail properties, according to a midyear report by Marcus & Millichap Real Estate Investment Services, is anticipated to jump 140 basis points this year to 11.1 percent, on the heels of a 90 basis point increase in 2007. Given the state of the market, Boscov’s is hardly the only retailer fighting to keep its head above water. Mervyns filed for Chapter 11 bankruptcy protection last week and later secured the court’s interim approval of its $465 million DIP financing facility, which will be provided by Wachovia Capital Finance Corp. Home furnishings specialty chain Linens ‘n Things filed to reorganize under Chapter 11 on May 2, and received the court’s final approval of its $700 million DIP financing by General Electric Capital Corp. on May 28. The company announced last week that it would close 57 underperforming locations in its portfolio of 589 stores. In business for nearly a century, Boscov’s is the largest independent family-owned department store in the country. The company currently has a presence in Delaware, Maryland, New Jersey, New York, Pennsylvania and Virginia.