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Supermarket chain files for Chapter 11 bankruptcy

A supermarket chain with stores in Florida and several other southern states filed for Chapter 11 bankruptcy on July 1. Grocery retailer Belle Foods cited slow sales and problems with creditors as the reasons why it is seeking bankruptcy protection only one year after the company was formed. One such creditor is C&S Wholesale Groceries. In 2012, the newly-formed Belle Foods purchased the supplier's corporate stores, the former Southern Family food stores. That purchase of 57 stores provided the foundation for the Belle Foods chain.

Belle's founder recently told a reporter that the chain's sales for the first half of 2013 failed to meet expectations. He blamed the slow sales on payroll tax increases that took effect at the beginning year. He said the increased taxes meant low-income shoppers had to cut back on their spending.

Due to the lower-than-expected sales, the chain is struggling to make payments on $28 million in outstanding loans related to the Southern Foods acquisition. These loans, which include a $24 million revolving loan and a $4 million term loan, are secured by a majority of Belle's assets. Belle's bankruptcy filing also reflects debts of $900,000 for a pension withdrawal liability and accounts payable of $5.1 million. The grocer additionally owes $8 million to trade creditors, including Coca-Cola, Pepsi Cola, Frito-Lay and others.

When a company is facing overwhelming debt due to slower than expected sales or unexpected expenses, bankruptcy may be an option. After filing for Chapter 11 bankruptcy protection, a company may continue its operations while working out a plan to reorganize its outstanding debt and repay its creditors. This can mean a fresh start for a company that otherwise can no longer operate profitably. Once the company has completed its debt reorganization plan, it may exit bankruptcy and begin rebuilding its credit. A knowledgeable bankruptcy attorney may be able to help a business owner determine if Chapter 11 bankruptcy is a viable option.

Source: Supermarket News, "Belle Foods Files Chapter 11", Jon Springer, July 02, 2013