Liquidators’ bid will start off Bon-Ton auction

A joint bid by two liquidation firms will be the starting point for bidding Monday in the bankruptcy auction of Bon-Ton Stores Inc.

Bon-Ton, the parent company of Boston Store, Younkers and other department store brands, has designated an undisclosed bid by Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC as the baseline bid, according to a court filing Friday.

That means it is the top bid to date, and sets the floor for bidding in Monday’s auction of the company and its assets.

Hilco and Gordon Brothers are part of a group that is running the goingout-of-business sales for Toys R Us and Babies R Us stores in the U.S.

Asked Friday whether any of the bids submitted for Bon-Ton were from firms that want to keep operating the company, Bon-Ton issued a statement:

“We are making every effort to sustain Bon-Ton as a going concern. As noted in the court filing, the bid submitted by Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC is a baseline to evaluate other potential offers and maximize value for our stakeholders through the court-supervised auction. Our team remains in discussions with the investor group to reach an agreement for Bon-Ton to be acquired as a going concern.”

A decision in U.S. Bankruptcy Court in Delaware this week dealt a setback to efforts by Bon-Ton executives to sell the company to a buyer that would keep it going and try to turn around its finances. Bon-Ton hasn’t been profitable since 2010.

A judge on Wednesday said Bon-Ton would not be allowed to reimburse $500,000 in due diligence costs by the potential “going concern” buyers — a condition Bon-Ton’s lawyers portrayed as a requirement to get a bid from that investor group.

The investor group included two mall owners and a hedge fund that planned to keep Bon-Ton in business if it won the auction. They had signed a letter of intent to pay a minimum of $128 million for Bon-Ton, along with an amount to be determined by Bon-Ton’s borrowing capacity at closing, but hadn’t made an official bid.

A group of creditors that has been pushing for the liquidation of Bon-Ton opposed the retailer picking up due diligence costs for a potential bidder that wanted to keep it operating.