EL SEGUNDO, Calif. — Fresh & Easy Neighborhood Market  here will be formally auctioned off Nov. 19, with the lead bidder — Yucaipa Cos . — having already made its offer public, according to published reports.
At a hearing Thursday, a U.S. Bankruptcy Court judge in Wilmington, Del., approved guidelines that will govern the auction. The court said potential buyers must submit bids by Nov. 15, with an auction scheduled for Nov. 19 if a competing qualified bid is received and with a winner named at a hearing for court approval scheduled for Nov. 21.
Under the proposed deal, an affiliate of Tesco , Fresh & Easy's British-based parent company, would lend YFE Holdings, a Yucaipa affiliate, approximately $126.5 million to help fund the acquisition, with Tesco receiving warrants to buy 22.5% of the equity in the reorganized company if Yucipa's offer is accepted and up to 10% if another offer is accepted, according to published reports.
Read more: Bankruptcy Paves Way for Tesco’s Exit 
According to a report on Law360.com, Tesco would have to pay YFE a break-up fee of $8.5 million if it is not named the winning bidder. Fresh & Easy would also have to pay YFE a $1.5 million break-up fee, plus a $750,000 reimbursement, the report said.
The report also noted that Fresh & Easy’s official committee of unsecured creditors supported the plan.
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