Small Businesses Hurt By Bon-Ton Bankruptcy

When one business files for bankruptcy it can cause a domino effect that hurts every single company in its supply chain. A recent article on the bankruptcy of Milwaukee-based Bon-Ton highlights the impact the retail giant’s collapse has had on Wisconsin’s small businesses and artisans whose products were sold in local stores through the company’s “Close to Home” program.

The article reveals a lot about the informal relationships and good will that underlie many business transactions. At Hanson & Payne, we know these things are just as important as the contracts between two businesses, especially when trying to negotiate a business workout or otherwise navigate a tricky financial situation, so to see it getting some media attention was quite exciting.

A Hidden Hurt

When Bon-Ton filed for bankruptcy there was a lot of talk about the demise of big box stores and the “end” of brick and mortar. Lost in all the big picture prognostication were stories about the bankruptcy’s impact on small businesses.

According to an article in the Green Bay Press Gazette, “Delaware bankruptcy court records indicate more than 60 Wisconsin-based contractors, vendors, suppliers, consultants and former employees filed claims totaling $2.6 million against the Milwaukee-based retail chain as it sought protection from creditors. Twenty of those claims, totaling $717,269, were filed by smaller companies that make products such as maple syrup, clothing, religious children’s books, jewelry, home art, drinkware, soap and candles.”

Many of these smaller companies who are now creditors in the Bon-Ton bankruptcy were participating in a unique program called “Close to Home” which encouraged Bon-Ton stores to set aside shelf space for locally made products. This is not something many big box stores do, so the artisans and small business owners that participated in the program, and are still owed money by Bon-Ton that they will likely never see, are not bitter about their losses.

Wisconsin Nice To The Extreme? Or Just Good Business?

One seller remarked, “[The Close to Home program] was a fine arrangement. It worked out well for us… Bon-Ton’s executives were more than nice to me, more than kind to me.” It seems shocking that a creditor would say something like that knowing that they will probably never get paid what they are owed, but is it really that unusual?

Yes and no. Creditors are upset when they don’t get paid money they are owed, but they are often also understanding. Nobody wants to see a business partner fail because the financial stress of that failure trickles down the entire supply chain. When being flexible is possible, it is the preferred course of action for many business owners.

Over the years, our firm has helped countless Milwaukee area businesses be flexible in order to avoid pushing a struggling business partner into bankruptcy. We know what works and what doesn’t, and we have developed strong relationships with the lenders and attorneys whose cooperation and patience are a necessary component of any successful business workout. Our tenure in the field has also led to our credibility with the commercial lenders, whose yes or no vote on a workout proposal typically means the difference between an opportunity to recover and a bankruptcy filing. If you need help working out a flexible but fair deal with someone in your supply chain, we are ready to lend a hand.