The largest family-owned department store chain in the US has filed for Chapter 11 bankruptcy protection and secured an agreement with courts and creditors to sell off company assets.
Boscov's, which is based in Reading, Pennsylvania, said pressure from the weakened economy had hampered operations in recent years.
The company, which has revenues of $1.2 billion, will receive $250 million in "debtor-in-possession" financing from a consortium of lenders led by Bank of America. The cash injection, approved by the US Bankruptcy Court in Delaware, will provide for the company to continue operations.
The company presently runs 49 stores in Pennsylvania, New York, New Jersey, Maryland, Delaware and Virginia. However, a fifth of stores are set to close as Boscov's has gained approval to select a liquidator to run store-closing sales at 10 of the chain's "under-performing" stores.
According to court documents, liquidation firm Gordon Brothers Retail Partners is the front runner to win the liquidation rights.
"The [filing] is an important step in the restructuring process as it will enable us to normalise our relationships with vendors and to continue to provide our customers with the wide selection, great prices and warm personalised service for which Boscov's is known," said Ken Lakin, chairman and CEO.
"We have been heartened by the expressions of support Boscov's has received from our customers, vendors and the communities Boscov's serves and we will be working with our creditors and others to move forward quickly with the hope of filing a Plan of Reorganization by late October."
Non-family member Lakin took the position as chairman and CEO in 2006, when second-generation family member Albert Boscov retired. Founded by Solomon Boscov in 1911, the Eastern Pennsylvanian chain is three years shy of its 100th anniversary.
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