(BELLE FOURCHE) – The Belle Fourche Shopko store will be closing by this May as the Wisconsin-based retailer failed to find a buyer and it was determined it would not emerge form Chapter 11 bankruptcy.
In January the Wisconsin-based retailer, which operates around a dozen stores in South Dakota, announced plans to close almost 70-percent of its locations before mid-May. As part of the restructuring the company had until last Friday to present a plan before a federal bankruptcy judge in Nebraska that would show how they expect to move forward as going concern, a move which did not succeed.
A statement from the company said it was still evaluating strategic options for its optical business. But the company said it would begin an “orderly wind-down of its retail operations” beginning this week.
“This is not the outcome that we had hoped for when we started our restructuring efforts,” said chief executive officer Russ Steinhorst. “We want to thank all of our teammates for their hard work and dedication during their time at Shopko.”
Along with Belle Fourche stores in Rapid City, Hot Springs, Sturgis and Custer will also be closing.
At the end of February bankruptcy proceedings hit a snag when it was disclosed that Shopko borrowed $179.5 million from lenders in order to pay dividends to Sun Capital Partners and other investors between 2007 and 2015. Sun Capital bought Shopko for $1.1 billion in 2005. This could give rise to conflict of interest claims and create a jittery environment for potential suitors as the case moves forward.
Despite creditors’ concerns court filings through early this month showed that Shopko still expected the reorganization plan to win the support of its lenders, landlords, vendors and a few of its unsecured creditors. But Shopko was unable to find a buyer, and the company said it was canceling an auction that had been planned for Tuesday, March 19, and instead has enlisted the firm Gordon Brothers to oversee a liquidation process that is expected to begin this week and conclude in 10 to 12 weeks. Shopko opened its first discount store in 1962. The company merged with Pamida in 2012 at which time the Belle Fourche location was rebranded from a Pamida to a Shopko Hometown store.