GREEN BAY, Wis.—Shopko, which filed for Chapter 11 bankruptcy protection in January, is expected to conduct an auction for its optical business beginning tomorrow, and noted in a court filing that the company is “in advanced negotiations with multiple potential bidders regarding a sale.” The deadline to submit bids and “all other documentation,” according to the filing, is 4 p.m. (Central Time) on Friday, April 12. The bankruptcy filing is under the jurisdiction of U.S. Bankruptcy Court for the District of Nebraska. 

A sale at auction could preserve “as many as 700 jobs and keep as many as 80 store locations open, a tremendous achievement in light of these cases,” Shopko said in the filing in bankruptcy court in Nebraska. “A sale of the optical business would also generate higher value than a liquidation of the related property, plant, equipment and inventory,” the filing noted.

No details about the value of the assets of the optical business or the potential bidders was noted in the court filing. Shopko, which operated about 135 optical departments as recently as last year, ranked as the No. 17 retailer in the VM Top 50 U.S. Optical Retailers report.

The winning bidder is expected to assume responsibility for some contracts and leases related to optical operations, including the company’s optical lab in Ashwaubenon, Wis., according to the filing.

In its initial bankruptcy filing, the company cited “excess debt and ongoing competitive pressures” as key factors leading to the Chapter 11, as VMAIL reported. At that time, Shopko noted that it had recently opened four freestanding optical stores and that it planned “to continue to grow its optical business by opening additional freestanding optical locations during 2019.” (Prior to opening the four freestanding locations, all of Shopko's optical centers were located inside Shopko retail stores.)

In this week’s court filing, Shopko said the auction of the optical business will be held at 9 a.m. Monday (April 15) at the offices of bankruptcy consultants Kirkland & Ellis LLP in New York City. Following the auction, the company will finalize definitive documentation to implement the terms of the winning bid, and, as applicable, file a notice of such winning bidder with the court no later than 10 a.m. April 16, according to the court filing.

U.S. Bankruptcy Judge Thomas Saldino is expected to certify the highest bidder during a hearing on April 18, according to the court filing.

Shopko noted that “at present, multiple bidders have expressed interest in purchasing the optical business, and the [company] hopes that other parties may also participate in the final stages of this sale process.”

The ongoing liquidation of the core Shopko business has shown to be an issue for realizing the value of the optical business assets, Shopko noted in the court filing this week “Unfortunately, as a result of the wind-down of their retail business, many of the key employees of the optical business have begun exploring alternative employment, and the [company’s] optical customers are increasingly transitioning their business to competitors,” the filing stated.

“As a result, time is of the essence: to realize the full value of the optical business and preserve the going concern, the [company] needs to consummate a sale transaction quickly with a well-capitalized buyer and resume immediately their process of ‘building-out’ a stand-alone optical business.”