Judge approves Bashas’ plan to emerge from bankruptcy over objections of secured creditorsBy Bob Christie, AP
Friday, August 13, 2010
Judge OKs Bashas’ plan to emerge from bankruptcy
PHOENIX — A plan by Arizona grocer Bashas’ Inc. to emerge from bankruptcy protection was approved by a federal judge on Friday over the objections of banks and insurance companies holding the company’s secured debt.
The objections by the secured lenders would only have delayed the case and would not have been in the interests of anyone involved in the bankruptcy, Judge James Marlar wrote.
“Any new plan could not exceed the 100 percent payment now proposed,” his opinion said. “It would be futile to go back to the drawing board, with an acceptable 100 percent payment plan now before the court.”
Bashas’ plan was supported by its unsecured creditors, primarily suppliers.
The family owned company, based in Chandler, filed for a planned Chapter 11 bankruptcy reorganization in July 2009 after being stung by the global credit crisis, slowing growth and the hyper-competitive Phoenix-area grocery market. Bashas’ said it had about $271 million in liabilities and $386 million in assets.
It had more than 155 stores but now has just 132, all but two in Arizona. The company also cut about 1,000 workers and renegotiated store leases to slash costs.
Besides Bashas’ stores, the company operates Food City, which caters to Hispanic shoppers, and high-end grocer AJ’s Fine Foods.
“It’s a joyous day for the Bashas’ family” and its employees,” said Michael McGrath, the company’s bankruptcy lawyer. “We believe the judge’s ruling was a vindication of Bashas’ reorganization plan.”
“We are humble, grateful, and extremely pleased with the outcome,” senior vice president Edward Basha III said in a letter to employees.
Marlar noted that during the year that the company has been under bankruptcy court protection, “it has remained in business, renegotiated many of its leases, closed underperforming stores or those with no future potential, sold excess assets, and operated on its current income, staying within its budgets.
“And, importantly, it has become profitable,” the judge said.
The company now has more than $100 million in cash, which it plans to use to bring its interest payments current, pay priority claims and the costs of the bankruptcy case.
It plans to pay its creditors over three years and then refinance an estimated $155 million in remaining debt and pay off all its current obligations, Marlar noted.
Tags: Arizona, North America, Ownership Changes, Phoenix, United States