ASHWAUBENON – Shopko will liquidate its assets and close all of its remaining locations by mid-June.

The company was unable to find a buyer for the retail business and will begin winding down its operations beginning this week, the company said in statement released Monday. The decision to liquidate will bring an end to the brick-and-mortar business that began with one location on Green Bay's west side in 1962.

"This is not the outcome that we had hoped for when we started our restructuring efforts," Shopko CEO Russ Steinhorst said in the statement. "We want to thank all of our teammates for their hard work and dedication during their time at Shopko."

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Shopko in February announced plans to close 250 stores, or about 70 percent of its locations as it attempted to scale back the business and work through bankruptcy to restore profitability and attract a buyer or investor.

That list was expanded at noon Monday with the inclusion of the 120 stores that Shopko had hoped to keep open, according to a document filed Monday in U.S. bankruptcy court in Nebraska.

Prior to bankruptcy, Shopko employed more than 15,000 people nationwide including about 5,000 in Wisconsin, according to court documents.

Employees at Shopko headquarters, in Ashwaubenon, found out about the liquidation during an emergency meeting on Monday. Individual stores had team meetings to pass along the same information. An employee who works at the headquarters said longtime employees teared up as managers told them the news.

The liquidation will leave big holes in tow Green Bay area shopping malls: Bay Park Square in Ashwaubenon and East Town Mall in Green Bay. But it also means big impacts in smaller communities like Oconto and Sister Bay, where there isn't another large retailer or a pharmacy to take over prescriptions.

Door County Economic Development Corp. Executive Director Jim Schuessler said Shopko's struggles fit in with challenges the retail industry has dealt with for the last 10-12 years. Schuessler said he hoped Shopko would emerge from bankruptcy, but also started to prepare for the likelihood the Sister Bay store would close.

"I hoped against hope we wouldn’t lose that store, but we’ve already developed a prospect list and will be going out to engage prospective retailers for that site and its availability," Schuessler said. "We want to focus on finding someone who will provide the amenities that Shopko did in Sister Bay."

Schuessler said there has already been progress toward filling the pharmacy void. Hometown Pharmacy has said it will open a location in the Sister Bay area, and Advocate Aurora Health Care has shifted its business model to make fill prescriptions of patients in the Sister Bay area.

"We will solve this," Schuessler said. "I definitely see an opportunity in the long run."

Sale effort comes up short

The bankruptcy court had scheduled an auction for Tuesday morning in the hope of driving up the price of initial bids that were submitted last week. On Monday, it announced the auction was canceled and a bankruptcy consultant would oversee liquidation over the next 10 to 12 weeks.

The court filing indicates all store closures will be completed by June 16.

The company said it continues to evaluate options for its optical business. Shopko had originally hoped to spin off the business into standalone locations as part of its reorganization.

The optical business now becomes one of the assets it will look to sell in the liquidation process. The liquidation at the newly-identified closing stores will look much the same as what has occurred at Shopko stores that have already closed: Discounts will slowly increase over a period of weeks as the company looks to sell every bit of inventory and equipment on hand.

Craig Stevenson, a Madison-based partner with DeWitt Law Firm with expertise in bankruptcy law, said liquidation involves attempting to maximize the value of Shopko's assets by selling everything it can. Stevenson represents a creditor in the bankruptcy case and would not discuss specifics of the Shopko bankruptcy.

"The concept is to take all assets and make as big a pile of money as you can as efficiently as you can," Stevenson said. "The idea is to take everything there and make it money that can be distributed to claimants in the bankruptcy."

Claimants include:

Secured creditors, such as banks and lenders that have collateral for their loans

Administrative claimants, including states and municipalities with unpaid tax bills and employees who will continue to work as the company winds down

Unsecured creditors, who have supplied products or services to Shopko but without the benefit of collateral backing up their claim.

Stevenson said the liquidation auction would likely be guided by a plan that spells out how assets will be managed and distributed, how things like payments to suppliers in the 90 days before bankruptcy are paid, and how recently-raised claims that Shopko inappropriately paid dividends to its private-equity owners will be handled.

Shopko and its affiliates filed for bankruptcy protection on Jan. 16 citing assets of less than $1 billion and liabilities between $1 billion and $10 billion. It had sought a buyer that would keep a smaller number of the company's brick and mortar locations operating beyond bankruptcy.

Contact Jeff Bollier at (920) 431-8387 or jbollier@gannett.com. Follow him on Twitter at @GBstreetwise.