Mall owners set to bid together to save Bon-Ton from liquidation

Derek Davis | Portland Press Herald | Getty Images

A Bon-Ton store in South Portland, Maine.

U.S. mall owners Washington Prime Group and Namdar Realty Group will bid together to save department store chain Bon-Ton from liquidation, according to court documents filed Monday that were reviewed by CNBC.

It was reported last week that the two companies would attempt to acquire the embattled retailer out of bankruptcy. Bon-Ton, which operates other mall-based chains including Carson’s, Younkers and Herberger’s, is a tenant of Washington Prime’s and Namdar’s properties.

Bon-Ton has meanwhile sought and received approval from its lenders to extend the deadline for submitting qualified bids, and an auction is now set for April 16.

In doing so, the department store chain has sparked outrage from a group of creditors that wants Bon-Ton to liquidate entirely.

Bon-Ton operated roughly 250 stores when it filed for Chapter 11 bankruptcy protection in February. It had already started liquidating some of its assets — planning to close about 40 stores under various banners across the U.S. at the time.

In securing funding to make the deal work, it’s been reported that Washington Prime and Namdar will use their properties to raise debt to finance the acquisition. The court documents said the mall owners would acquire “substantially all of” Bon-Ton’s assets.

Both Washington Prime and Namdar didn’t immediately respond to CNBC’s requests for comment.

This wouldn’t be the first time two mall owners joined forces to save a struggling retailer in a bid to keep their properties occupied, especially when a key tenant is involved. Simon and GGP, for example, bid roughly $240 million in 2016 to save teen apparel retailer Aeropostale from liquidating. The deal helped keep hundreds of stores opened.

Columbus, Ohio-based Washington Prime is a spin-off from Simon and owns interests in a little more than 100 properties today. Namdar, based in Great Neck, New York, also has about 100 properties including medical and office buildings.