BIRMINGHAM, Ala. — Scrambling to find a buyer, and with financing running low, Bruno's Supermarkets last week was teetering on the edge of liquidation.
The retailer, which filed for Chapter 11 bankruptcy protection in February, asked the court for permission to “sell all or substantially all of its assets” in an auction later this month if a buyer did not emerge before then. The company in court papers said an “emergency sale” of the company — either as a going concern or to a liquidator — is in the best interest of its estate and creditors after it failed to attract a “stalking horse” bid. The proposed auction would be held April 29.
Bruno's, however, “continues to negotiate with potential purchasers and remains open to the possibility that interested parties may submit stalking horse bids for some or all” of the company. The union representing employees at the stores expressed hopes that an offer for at least some stores would arrive last week.
Parties in the meantime were still waiting last week for a judge's ruling on whether Bruno's could remove successor language from union contracts that it identified as a barrier to a sale. The trial was held April 2.
In a post-trial brief filed last week, United Food and Commercial Workers Local 1657, which represents workers at Bruno's stores, revealed that it had spoken with three potential buyers of Bruno's stores.
One meeting, on March 26, was with representatives interested in a transaction whereby a number of employee stock option plans would purchase a block of stores and a supermarket chain would purchase a smaller block. But that party made it clear that it would not proceed with a deal unless the union contracts were rejected entirely.
A second buyer — identified in court papers as a grocery executive who would become its chief executive officer if a deal were reached — met with the union April 1. This buyer asked the union to consider negotiating a new agreement covering all stores and not including a successor clause.
A third buyer was solicited by the union and encouraged to make an offer to acquire a block of stores, the union testified. This group made an offer to acquire some stores last week, its attorneys said in a letter filed in connection with the case.
Bruno's operated 66 locations when it filed for bankruptcy, and has since sought court approval to close 10 of those locations. It has also notified the state of Alabama that as many as 38 of its 60 stores there could close by mid-May.
