Two months after filing for bankruptcy and announcing 100 store closures, Shopko is closing all 363 stores. The department store was unable to find a buyer before a March 14 reorganization deadline and will liquidate its assets as a result. All stores will be closed by June 16.
Gordon Brothers will oversee a liquidation of the stores, beginning this week. The process is expected to conclude in approximately 10 to 12 weeks. In its Chapter 11 filing in January, Shopko cited excess debt and ongoing competitive pressures, and reported assets of less than $1 billion, compared to liabilities between $1 billion and $10 billion.
Shopko had scheduled an auction for March 19 in hopes of driving up the price of initial bids that were due last week, but the retailer has since cancelled the auction.
As part of its reorganization, Shopko initially planned to close an additional 38 stores (on top of approximately 60 during the past year) and relocate more than 20 Optical centers to freestanding locations; now the department store has to reevaluate options for these centers. In February, the retailer upped the number of closures from 100 to 250 locations, or approximately 70% of the remaining stores.
“This is not the outcome that we had hoped for when we started our restructuring efforts,” Shopko CEO Russ Steinhorst said in a statement.
Shopko had a rocky relationship with its creditors, which wanted to force the retailer’s owners to return $117 million in dividends paid over the last four years. In a motion filed in bankruptcy court, a committee representing some of the company’s largest landlords and suppliers contends that $67 million in special dividends and fees constituted a “fraudulent conveyance” while another $50 million in dividends were “illegal.” McKesson Corp., one of the suppliers, already had engaged in a lawsuit with Shopko over the $67 million.
Shopko had four loans with a combined outstanding balance of $439.8 million. All were due by 2020. Sun Capital Partners, a private equity firm, acquired Shopko for approximately $1.1 billion in 2005.