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Grocery store chains reportedly preparing to file for bankruptcy

Many retail businesses in Quincy are used to getting by on tight margins and increasingly tough competition, but perhaps none more so than grocery stores. Factor in cuts to food stamp subsidies as well as Amazon’s recent acquisition of Whole Foods in preparation to expand its own presence on the ground, and some grocery stores are wondering what their exit strategy will be if business is no longer sustainable.

The parent company of one major grocery chain, Winn-Dixie, is reported to be anticipating filing for bankruptcy next month. It is expected to close some 200 locations as it seeks a way out from under the more than $1 billion it owes. Another company, which owns Tops Friendly Markets, might file for bankruptcy yet this month as it struggles with debt, acquired in part through a series of ownership transactions.

Chapter 11 bankruptcy, for a business, does not spell the end the way Chapter 7 does. Winn-Dixie has gone through the process twice before during the 2000’s and may be able to eliminate debt through a business reorganization once again. Tops has been around for over a century and is a significant presence in this region; it also owes far less than the Winn-Dixie parent company.

Chapter 11 bankruptcy allows businesses an opportunity to develop a reorganization plan and discuss terms of debt relief with its creditors. When a business continues to have solid assets despite serious debts, filing for Chapter 11 can allow it to take advantage of those assets as it moves forward in a new direction.

Source: Bloomberg, “Winn-Dixie and Tops Owners Are Said to Prepare for Bankruptcy,” Lauren Coleman-Lochner, Feb. 16, 2018