Younkers stores in Iowa could close as company heads to liquidation

A Delaware bankruptcy judge is expected to approve a bid to sell Younkers parent the Bon-Ton Stores Inc. to a group of investors that plans to liquidate its inventory and close the company's 250 stores, including 15 in Iowa.

Great American Group and Tiger Capital Group were the successful bidders in the Bon-Ton auction Tuesday with an offer to pay $775.5 million, according to the website Reorg Research.

"While we are disappointed by this outcome and tried very hard to identify bidders interested in operating the business as a going concern, we are committed to working constructively with the winning bidder to ensure an orderly wind-down of operations that minimizes the impact of this development on our associates, customers, vendors and the communities we serve," Bon-Ton Chief Executive Bill Tracy said in prepared statement late Tuesday.

All stores are expected to continue normal operations until a liquidation sale has been created, the company said.

Bon-Ton filed for Chapter 11 reorganization in February with the hopes of restructuring its debt or finding a buyer that would continue operating the regional department store chain.

The closing of Younkers stores in Iowa would put hundreds of people out of work and a dozen or so shopping malls with cavernous spaces to fill.

But several mall owners say it's too early to write the obituary for the 162-year-old Iowa-born department store chain.

"There's so much uncertainty that I am not going to speculate on what's going to happen," said Paul Stender, general manager of Valley West Mall in West Des Moines.

Valley West is one of four malls in the Des Moines metro that has a Younkers store.

Bon-Ton operates stores under names Younkers, Herberger’s and Bergner’s, among others.

Bon-Ton owns 49 Younkers stores, including 15 in Iowa. It also has a Herberger's store in Ottumwa.

Eight of the company's Iowa stores are on an Iowa Workforce Development list of companies expecting to make layoffs. This includes Younkers stores at Merle Hay Mall in Des Moines and Valley West Mall and Jordan Creek Town Center in West Des Moines.

State and federal law require employers to give 60 days advance notice for certain plant closings and mass layoffs. About 799 workers would be out of a job at the eight stores, according to state reports. The stores would close by June 5.

Stores outside the Des Moines area listed for closure include Sioux City, Mason City, Coralville, Cedar Rapids and Dubuque.

Not included on the state list so far is Southridge Mall in Des Moines, which employs about 50 people. Bon-Ton has additional Younkers locations include Ames, Marshalltown, Fort Dodge, Davenport and Muscatine.

How store closings might affect shopping malls in the Des Moines metro and throughout Iowa is still unknown.

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The struggling department store chain said in January that it planned to close several stores including the Younkers at College Square Mall in Cedar Falls and Westdale Mall in Cedar Rapids.

The Younker brothers founded the company as a general store in Keokuk in 1856. Two of the brothers opened the downtown Des Moines store in 1874. It was the first Iowa store to install electric stairs (escalators) and was home to the well-known Younkers Tea Room, which hosted decades of lunches and parties.

The company was sold to Equitable of Iowa Cos. in 1978 and to Saks Inc., then operating as Proffitt’s Inc. in 1996. Saks sold the department store chain to Bon-Ton in 2006.