Tops Markets files for Chapter 11 Bankruptcy, Bi-Lo to follow?
On Wednesday Tops Markets filed for bankruptcy protection in a bid to restructure its balance sheet. The regional grocery store announced that stores will remain open and not be impacted on a day-to-day basis during the restructuring process.
The Wall Street Journal reported that Chief Restructuring Officer, Michael Buenzow said that the 2007 purchase of the company and subsequent transactions by Morgan Stanley’s private equity arm “saddled the company with an unsustainable amount of debt on its balance sheet.” A 2017 media report pegs the company’s debt at roughly $720 million.
“We are now undertaking a financial restructuring, through which we expect to substantially reduce our debt and achieve long-term financial flexibility,” Tops CEO Frank Curci said in a statement on Wednesday. This will enable us to invest further in our stores, create an even more exceptional shopping experience for our customers and compete more effectively in today’s highly competitive and evolving market,” Curci said.
Tops has received a commitment for a $125 million debtor-in-possession (DIP) term loan financing facility from certain noteholders and a $140 million DIP asset-based revolving loan from Bank of America, N.A., which are expected to support the company’s continued operations during the court-supervised restructuring process.
Tops currently employs more than 14,000 people across roughly 170 stores. The grocer has sought court authorization to continue business operations, such as payment of employee wages and benefits, without interruption. It intends to pay vendors and suppliers in full for goods and services past the filing date of Feb. 21.
Last week, Bloomberg reported that Bi-Lo, the company behind the Winn-Dixie chain, is preparing for a Chapter 11 filing as soon as March. They also reported unnamed sources have said Bi-Lo is planning to shut almost 200 stores either before or after its filing.