TCPC borrower Bon-Ton to liquidate

The department store chain is just the latest retailer that failed to reorganise in bankruptcy.

The Bon-Ton Stores, a TCP Capital Corporation portfolio company, began its going-out-of-business sales on Friday, setting its wind-down in motion after the results from a bankruptcy auction were approved by federal judge in Wilmington, Delaware on Wednesday.

A joint venture between Great American, Tiger Capital Group and holders of the York, Pennsylvania-based retailer’s second lien notes prevailed with a plan to wind-down the York, Pennsylvania-based retailer after a going-concern bid collapsed.

No liquidation plan outlining credit recoveries has been filed with the bankruptcy court. TCP held a $15.52 million position in Bon-Ton’s first lien debt, as of 2017 year-end, according to Thomson Reuters BDC Collateral.

Representatives for TCP, a Santa Monica, California-based business development company and Bon-Ton could not be immediately reached for comment.

A portion of the second lien noteholders’ winning offer was a $125 million credit bid, meaning that amount will be offset from its creditors’ claim, according to court documents. In addition, the winners will make a cash payment to settle debtor-in-possession financing obligations and fund administrative expenses associated with Bon-Ton’s store-closing sales.

DW Partners, Namdar Realty Group and Washington Prime Group had made an offer to acquire Bon-Ton and continue operating its stores. Bankruptcy Judge Mary Walrath handed that bid a setback after she declined to approve a $500,000 due diligence fee for the group, media reports showed, which was part of the group’s bid proposal.

TCP is hardly the only BDC to grapple with a troubled retailer in its portfolio. TPG Specialty Lending and Sierra Income Corporation held positions in shoe retailer Payless, while CION Investment Corporation, THL Credit and Sierra hold investments in jewelry store Charming Charlie, respectively, according to BDC Collateral.

Payless successfully reorganised. Charming Charlie won approval of a Chapter 11 plan that would allow the company to continue its operations and avoid liquidation, the fate of multiple retailers lately, including, likely, Toys “R” Us.