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Earth Fare Inc. – Oak Hill Partners Backed Supermarket Becomes Second Organic Food Chain to File Chapter 11 in Under a Week

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[Developing story- to be updated] February 3, 2020 − Earth Fare Inc. and one affiliated Debtor (“Earth Fare” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 20-20-10256. The Debtors, a natural and organic supermarket chain with 50 locations in 10 states throughout the Southeast and Midwest United States, are represented by M. Blake Cleary of Young Conaway Stargatt & Taylor, LLP. Further board-authorized engagements include  (i) FTI Consulting Inc. as financial and restructuring advisor, (ii) Malfitano Advisors, LLC to provide asset disposition advisory services and (iii) Epiq Corporate Restructuring, LLC as claims agent.

The Debtors’ lead petition notes between [10,000] and [25,000] creditors; estimated assets between $[]mn and $[]mn; and estimated liabilities between $[]mn and $[]mn. Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) UNFI ($9.6mn trade claim), (ii) Inland Seafood ($6.2mn trade claim) and (iii) Albert's ($5.9mn trade claim).

On January 27th,  Lucky's Market Parent Company, LLC and affiliated Debtors (“Lucky's Market”) filed for Chapter 11 protection in Delaware with approximately $600.0mn of liabilities. In their filing, Lucky’s cited the impact of the competitive Florida market as the principle driver of unsustainable losses (specifically citing competition from Earth Fare which has 14 stores in the sunshine state), including an approximately $100.0mn net loss in 2019. 

Colorado-based Lucky’s was pushed towards an unorganic growth strategy by investor The Kroger Co. (“Kroger’s) which ultimately pulled the financial plug on its failing investment in December 2019. Commentators have noted that Kroger’s had played the role of a PE investor in charting that company’s course into the steroid-driven Florida market; Earth Fare not needing a grocer dressed in PE clothing to pump up Florida operations, with its own backing coming from Oak Hill Capital Partners and Monitor Clipper Partners.

In a press release announcing the filing, Earth Fare advised that “it will begin inventory liquidation sales at all of its stores….During this time, the Company will continue to pursue a sale of assets, in whole or in parts. [C]ontinued challenges in the retail industry impeded the company's progress as well as its ability to refinance its debt. As a result, Earth Fare is not in a financial position to continue to operate on a go-forward basis. As such, we have made the difficult, but necessary decision to commence inventory liquidation sales while we continue to engage in a process to find potential suitors for our stores."

Significant Equity Holders

  • Oak Hill Capital Partners: 74.9% (aggregated over two entities)
  • MCP Heirloom LLC [e Monitor Clipper Partners]: 18.76% 

About the Debtors

Based in Asheville, North Carolina, Earth Fare has long served the natural and organic grocery market. Their full-service philosophy incorporates the highest food Quality Standards in the industry with compelling value, friendly and knowledgeable service, and superior shopping experience. It's a philosophy that makes it easy to live a healthier lifestyle, every day.

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The post Earth Fare Inc. – Oak Hill Partners Backed Supermarket Becomes Second Organic Food Chain to File Chapter 11 in Under a Week appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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