Alabama Grocery Chain Files For Bankruptcy under Chapter 11

Author: Joel R. Glucksman|July 18, 2013

Alabama grocery conglomerate – Belle Foods – filed for bankruptcy law protection under Chapter 11 of the Bankruptcy Code, citing excessive debt and insufficient cash flow as the cause of its financial strain.

Alabama Grocery Chain Files For Bankruptcy under Chapter 11

Alabama grocery conglomerate – Belle Foods – filed for bankruptcy law protection under Chapter 11 of the Bankruptcy Code, citing excessive debt and insufficient cash flow as the cause of its financial strain.

The company, which once operated the former Bruno’s and Food World stores, said it was finding it difficult to meet its creditor obligations with revenue from its 57 stores in Alabama, Georgia, Florida, and Mississippi. Belle Foods acquired the stores from Southern Family Markets, the company that took control of a number of Bruno’s and Food World chains, according to AL.com.

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As a result of the purchase, Belle Foods still owes Southern Family Markets $4 million for a loan and $24 million in a revolving line of credit. Belle Foods also owes C&S Wholesale Grocers $5.1 million in accounts payable and $900,000 on a pension withdrawal liability note, the news source reports. The company listed $8 million in other accounts payable due.

In its bankruptcy filing with the U.S. Bankruptcy Court for the Northern District of Alabama, the company cited technical difficulties with its accounting system and poor structuring of lending and creditor relationships as contributing factors to its bankruptcy.

“Additionally, higher payroll taxes in 2013 have led to a decline in purchases by the (Belle’s) customer base,” the filing said. “Furthermore, (Belle) has also seen an increased amount of competition in several of its markets from other grocers. With older locations, Debtor has had difficulty competing with the newer grocery stores that have moved into its markets.”

The Associated Press reports that the company attempted to shave costs in April by hiring 300 part-time workers to replace full-time staff. However, 34 percent of the company’s workforce is full-time, and a large percentage are union workers, who have collective bargaining agreements with United Food and Commercial Workers 1996 and 1529 and the Retail, Wholesale and Department Store Union.