BIRMINGHAM, Ala. — Officials of Belle Foods last week said they were confident the company would emerge “leaner and stronger” after filing for protection under Chapter 11 of the U.S. Bankruptcy code July 1.
Belle cited slowing sales and issues with creditors including C&S Wholesale Grocers, the supplier whose stores founded the basis of the chain. As part of the process Belle received approval to close 13 of its 57 stores last week. Officials said the closing stores were money-losers the company was unable to turn around since acquiring them a year ago.
Belle Foods was formed by Bill White and his son Jeff, who purchased 57 former Southern Family Markets stores from C&S last July. Many of those stores — located in Florida, Georgia, Alabama and Mississippi — formerly comprised the defunct Bruno’s chain. Belle’s filing marked the third time the owner of at least some of its stores filed for bankruptcy protection. Prior Bruno’s owners KKR (in 1999) and Lone Star Funds (in 2009) also sought bankruptcy protection.
Belle Foods intended to bring a new identity to the chain but progress slowed when sales dropped early this year, particularly in stores in lower-income areas, Bill White told SN in a recent interview.
“We’re in some unique markets where there’s just not a lot of money — low income, a lot of people on food stamps. And I think when January hit and everybody got a pay cut as a result of the payroll taxes, I think we certainly saw a downward trend though March and into April. It picked up a little again in May and June, but it took people a while to get used to not having so much money. They are not going to cut back on gas because they still have to go to work, so they cut back on food. They’re buying cheaper proteins and more on private label. They’ve only got so much money.”
In a statement last week, Belle Foods said it believes it has sufficient liquidity to operate stores as it reorganizes debt under Chapter 11.
“While the term bankruptcy has a strongly negative connotation, we want to assure you that our family-owned company will emerge from this as a stronger and healthier organization — an organization that will be even better able to serve you and your family and the communities in which we operate,” Belle said in a message to shoppers posted on its Facebook page.
Belle began going-out-of-business sales at 13 stores last week. Those stores — six Food World locations in Florida (Niceville, Mary Esther and four locations in Pensacola); six Alabama Food Worlds (Homewood, Florence, Hueytown, Mobile, Gadsden and Decatur) and a Piggly Wiggly in Tifton, Ga. — would close on or before Aug. 8, the company said. In response to a message on its Facebook page, Belle said the Pensacola stores were money-losers when acquired. “We tried to save the jobs and turn the stores’ profits around. We were able to save those jobs for a year, but unfortunately we could no longer support the losses.”
Belle in court filings said financial conditions also deteriorated in part because of a technical issue with its accounting system and from competition.
Belle said it owed Southern Family $28 million, consisting of a $4 million outstanding term loan and a $24 million revolving loan. Belle’s obligations to Southern Family are secured by the majority of its assets. Separately, Belle is obligated to C&S for a $900,000 pension withdrawal liability note and $5.1 million in accounts payable.
Belle said it had retained the Food Partners as its financial advisor. That group helped to assemble the 2012 acquisition of C&S’s Southern Family chain. The Food Partners said it would provide assistance with financing, planning and analysis including an assessment of stores that Belle could look to sell or close. The group would also assist in the potential disposition of stores.
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