Dive Brief:

• Shopko announced on Wednesday that it has filed for Chapter 11 in the District of Nebraska. The company is pursuing restructuring as a result of "excess debt and ongoing competitive pressures," the company stated in a press release.
• Shopko, which is owned by private equity firm Sun Capital, will also close an additional 38 stores, relocate over 20 Optical centers to freestanding locations and will conduct an auction for its pharmacy operations. Shopko said in a letter to customers that remaining stores will be open during restructuring.
• The retailer has obtained $480 million debtor-in-possession (DIP) financing from secured lenders to protect business operations through the bankruptcy process. The company stated that suppliers, vendors and business partners will be paid. In response to a request for comment, the retailer told Retail Dive a list of store closures will be available today. 

Dive Insight:

Speculation was mounting that Shopko might file for Chapter 11 after it was revealed in December that the retailer was closing 39 stores and Kroger announced plans to buy pharmacy records from 42 Shopko locations. Since that time, news outlets throughout the Midwest have reported on individual store closures that were slowly confirmed by the company. 

Then McKesson Corporation filed a request for a restraining order on Jan. 4 to prevent the retailer from selling its pharmaceuticals after the drug supplier alleged that the retailer owed it $67 million. In that filing, McKesson alleged that the retailer, "ceased making payments to multiple other vendors," and "has stopped paying numerous other creditors." McKesson was contacted by Retail Dive and declined further comment on those allegations. 

"This decision is a difficult, but necessary one," Shopko CEO Russ Steinhorst said in a statement. "In a challenging retail environment, we have had to make some very tough choices, but we are confident that by operating a smaller and more focused store footprint, we will be able to build a stronger Shopko that will better serve our customers, vendors, employees and other stakeholders through this process." 

In its Chapter 11 statement, the company also revealed a plan to grow its optical business and open additional locations in 2019.