BIRMINGHAM, Ala. — Bruno's Supermarkets asked U.S. Bankruptcy Court here to void parts of its contracts with the United Food and Commercial Workers union last week, saying that successor agreements in the deals are an “impenetrable barrier” to a potential sale and survival of the chain.
A union spokesman told SN that the UFCW was willing to help, but that it would not surrender worker rights until Bruno's showed it had “a credible perspective buyer.”
Bruno's is seeking to sell the chain as a going concern to generate the best return to its creditors, but acknowledged in court papers it had to do so before its financing runs out in late May. It detailed a loss of $45.7 million in 2008 and said its losses were expected to accelerate this year. Bruno's said it would recover “tens of millions more in net proceeds from selling its stores as going concerns” than it would through a liquidation as real estate.
A sale, however, has been complicated by labor contracts containing a clause requiring a purchaser of the company to assume the existing agreements with UFCW Local 1657.
The contracts have been a sticking point with potential buyers both before and after Bruno's filed for bankruptcy protection Feb. 5, the company said last week.
Since the bankruptcy filing, representatives from Nations Bank, which has provided financing for Bruno's, have contacted 104 potential purchasers for the chain and entered into confidentiality agreements with 19 of them, Bruno's added. Of that group, Nations Bank said seven are potential purchasers for Bruno's, but that five have indicated they are not interested in assuming the contracts.
“What they want us to do is give up language these workers negotiated for themselves without anything being offered in return,” countered Corey Owens, a spokesman for the UFCW, in an interview with SN.
Bruno's in the filing indicated that its non-union employees have already made sacrifices, including corporate layoffs of 19 workers, or 16% of its headquarters staff, as well as pay freezes and the suspension of matching 401(k) contributions.
A court hearing on the matter has been set for March 30.