ALCO Stores Files for Bankruptcy as Small-Town Sales SlowDawn McCarty
ALCO Stores Inc., the 113-year-old small-town retailer, sought bankruptcy protection with a plan to liquidate assets at store-closing sales, blaming a drop in consumer spending on a lingering economic slowdown. The shares fell 71 percent today in New York trading.
ALCO, which also cited increased competition for the bankruptcy filing, listed assets of $221.7 million and debt of $161.6 million as of July in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Dallas. The company said it owes about $104.2 million under a credit agreement with Wells Fargo Bank NA.
The company, based in Coppell, Texas, was founded in 1901 as a single variety store. It now operates 198 stores in 23 states, focusing on smaller communities with limited access to other regional or national retail chains, the company said on its website. It offers more than 35,000 items including furniture, electronics and apparel.
ALCO was hurt by “declining consumer and business confidence, which has led to decreased customer traffic and reduced levels of consumer spending, particularly on discretionary items,” Stanley Latacha, interim chief executive officer, said in court papers.
The company has approached potential buyers to purchase the chain and keep some, or all, stores operating, Latacha said.
ALCO is seeking approval to have Tiger Capital Group LLC, SB Capital Group LLC and Great American Group WF LLC together make an initial bid in a bankruptcy auction. The winning bidder will serve as liquidation agent to conduct store closing sales at some or all of the stores, according to court papers.
As of February, the company had net sales from continuing operations of about $474.1 million, according to court papers.
ALCO plans to borrow as much as $122.7 million from a group of lenders arranged by Wells Fargo, consisting of a $110 million revolving credit facility and a $12.7 million term loan, to help fund operations while in bankruptcy, according to court papers.
The case is In re Alco Stores Inc., 14-34941, U.S. Bankruptcy Court, Northern District of Texas (Dallas).