GREEN BAY, Wis.—Shopko announced Wednesday that it has filed voluntary petitions for a court-supervised financial restructuring under Chapter 11 of the U.S. Bankruptcy Code. As part of the restructuring process, the company said it will conduct another major round of store closings across its various store formats. At the same time, the company said it intends to relocate at least 20 optical centers that are located inside stores scheduled to close to new freestanding locations.

The company cited “excess debt and ongoing competitive pressures” as factors leading to the Chapter 11 filing, the announcement on Wednesday noted. The bankruptcy petitions were filed in the U.S. Bankruptcy Court for the District of Nebraska.

According to details Shopko posted on a website set up to provide information about the restructuring, 42 of the stores scheduled to close in the restructuring currently have optical departments. These optical locations "will remain open to serve [patients] during store closing," the company said. In addition, these optical centers "will be relocated very soon to a new location with the same patient care you have come to expect from your Shopko Optical center,” the notice stated.

In its announcement, Shopko said that it is “encouraged by the performance” of its initial four freestanding optical centers that opened in late 2018 and that it “plans to continue to grow its optical business by opening additional freestanding optical locations during 2019.” (Prior to these four freestanding locations, all of Shopko's approximately 135 optical centers operated inside Shopko retail stores.)

“This decision is a difficult, but necessary one,” Shopko chief executive officer Russ Steinhorst said in the company’s restructuring announcement. “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.”

Shopko, which had about 360-370 locations in the Midwest and Pacific Northwest at its peak earlier this decade, has now announced plans to close about 80 to 100 stores overall, most of which will be the company’s smaller Hometown format.

During the restructuring process, Shopko will operate with the support of up to $480 million of debtor-in-possession (DIP) financing from certain of its prepetition secured lenders, including Wells Fargo. This incremental liquidity will ensure that suppliers and other business partners and vendors will be paid in a timely manner for authorized goods and services provided during the Chapter 11 process, according to the announcement.

Shopko noted that it is filing customary first-day motions that, once approved by the court, will allow the company to transition its business into Chapter 11, including granting authority to pay vendors and suppliers in the ordinary course for authorized goods and services provided on or after the filing date.

Additional information is available on the company’s restructuring website at info.shopko.com or by clicking on the “restructuring” link on www.Shopko.com.  Court filings and other documents related to the court-supervised process are available at https://cases.primeclerk.com/shopko or by calling the company’s claims agent, Prime Clerk, at (844) 205-7495.

Shopko operated about 135 optical locations as of year-end 2017 and ranked as the 17th largest optical retailer in the U.S., according to Vision Monday’s annual Top 50 Optical Retailers report

The company had said earlier this month that it planned to put more emphasis on freestanding optical centers in 2019, as VMAIL reported.