Retail chain Shopko filed for Chapter 11 protection in U.S. bankruptcy court in Nebraska on Wednesday, citing excessive debt and ongoing competitive pressures.
The company said it had assets of less than $1 billion and liabilities of between $1 billion and $10 billion. It said it has secured up to $480 million in debtor-in-possession financing from some of its prepetition secured lenders, led by Wells Fargo as administrative agent.
The company will close 105 stores, according to a website it set up to give information on the restructuring. It will also transition 20 optical centers from existing Shopko stores into stand-alone locations. Based in Green Bay, Wisconsin, the company operates general merchandise stores in the Central, West, and Pacific Northwest. The retailer was bought by Sun Capital in 2005 for about $1.1 billion. The store closures include Shopko’s original store in Green Bay.
“This decision is a difficult, but necessary one,” Shopko CEO Russ Steinhorst said in a statement. “In a challenging retail environment, we have had to make some very tough choices, but we are confident that by operating a smaller and more focused store footprint, we will be able to build a stronger Shopko that will better serve our customers, vendors, employees, and other stakeholders through this process.”
The drug supplier McKesson asked a judge for a restraining order to prevent Shopko from selling drugs it has sold the company. McKesson said it sold Shopko $67 million in drugs since Nov. 11 but has not been paid since early December.
Shopko’s legal adviser is Kirkland & Ellis. Its restructuring advisor is BRG. Its financial advisor is Houlihan Lokey.
The company said during the restructuring, it will continue to operate and serve customers, vendors, and employees. It said the incremental liquidity from the DIP financing will allow it to pay advisors in a timely manner.