Glosser Brothers, the owners of Gee Bee and Dollar Bargain department stores filed for bankruptcy last Friday, forcing the closing of two stores.
"Mainly we were unable to come to a financing package with our lender (Mellon Bank)," Advertising and Sales Promotion Vice President Joe Kelly said.
Representatives from Mellon Bank declined to comment.
Glosser Brothers owns 21 Gee Bee stores, 44 Dollar Bargain stores and two Gee Bee Junior stores.
The company is closing one Gee Bee in Manassas, Va., as well as the Johnstown Glosser Brothers department store, which is slated to close May 27. All 185 employees will be laid off at that time, a spokesman for Glosser Brothers said.
But even though the parent company is in financial trouble, the Gee Bee store in the Nittany Mall has done well since it was opened in 1976, Kelly said.
"At this time there aren't any changes planned as far as I know," State College Gee Bee Assistant Manager Tom Shepherd said.
"I don't really know what the effect will be," he said. "We found out when everybody else did."
In October 1985, Glosser Brothers stores went private after G.B. Holdings purchased the company in a leverage buyout, Kelly said.
Assets and liabilities of both Glosser Brothers and G.B. Holdings total around $76.6 million and $83.1 million, respectively.
Filing under Chapter 11 allows for reorganization of the petitioner's debts under a court-approved payoff plan, said Allegheny County bankruptcy court Deputy Clerk Jack Lucas.
Glosser Brothers first had to file an emergency petition and pay $500 to the bankruptcy court. After the filing date, Glosser Brothers has 15 days to finish filing all of their assets and liabilities, Lucas said.
Within an approximate two-month period, Glosser Brothers must provide the court with their Chapter 11 plan, which will contain an exact breakdown of percentage payoffs to be made, he said.
However, Lucas noted that nailing down a mutually agreeable plan between debtor and lender is often an arduous task.