Dive Brief:

• Bon-Ton Stores is discussing a possible going-concern bid with an interested party ahead of a bankruptcy auction later this month for the retailer and its assets, the company said in a press release. 
• Because of the talks, the retailer extended, with court approval, the deadline for bids on the company and its assets, according to the release. 
• Bon-Ton did not disclose details of talks or the identity of the prospective buyer. The company said in the release that there were "no assurances that discussions with these interested parties will lead to a definitive agreement being reached on any transaction." In a recent court filing, Bon-Ton said it racked up a $62.9 million loss in February, a figure that included more than $32.7 million in bankruptcy expenses.

Dive Insight:

When the department store retailer filed for Chapter 11 early in February, Bon-Ton had no specific plan of exit outlined or agreed on with its lenders. Now, as it winds through the process, the possibilities for the retailer are more clear: acquisition or liquidation. 

In March, a lawyer representing two stakeholders in the bankruptcy has told Retail Dive that two groups of vendors appeared to be forming to make potential bids on major pieces of Bon-Ton's business, including as many as 175 stores. (Before filing for Chapter 11, the company operated some 260 stores under the banners Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's and Younkers.)

At the same time, some bondholders want the retailer to liquidate, as they see a full business wind-down as the only viable path to repayment of the debt Bon-Ton owes them. In a February filing, the group of second lien bondholders said that "Bon-Ton's "survival is, at best, uncertain and in reality, unlikely."

In an added twist, the bondholders, together with liquidator Great American Group, said through an attorney at a March hearing that they plan to make their own bid for Bon-Ton — to liquidate the company. 

James Baird, one of Bon-Ton's financial advisers with PJT Partners, said in a court filing that in the months leading up the the retailer's Chapter 11 filing, his firm went to 38 "potentially interested parties" about an acquisition, without a specific proposal drawn up. Just seven of those the firm approached signed confidentiality agreements to begin a due diligence process. By the time of the filing, the talks hadn't produced any formal interest, though Baird said some parties wanted to keep talking.

But that doesn't mean Bon-Ton couldn't find a buyer in bankruptcy. In fact, as Philip Emma, a retail analyst with Debtwire, pointed out in a March interview, Bon-Ton's prospects for attracting an acquirer have likely brightened since filing.

"If you're buying out of bankruptcy, you can buy a cleaner business," Emma said. That's especially true for retailers, which typically shed unprofitable stores during a Chapter 11 process that allows them to exit leases more quickly and cheaply than they could otherwise, Emma pointed out.

Bon-Ton remains relatively small compared to its peers, with some $2.6 billion in sales. It's also among the very few regional department stores left after years of consolidation and closures. Emma suggested earlier this year the company's lack of scale might have made it more difficult to deal with its numerous financial issues, including debt incurred to fuel an expansion.  

If Bon-Ton can't find a buyer and is forced to liquidate, it would be the first department store chain to fully liquidate in years, according to S&P Global.