Monday, Bi-Lo announced it filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Courts.
Bi-Lo intends to use the court-supervised process to address an upcoming debt maturity. The chain grocery store expects to reach ”mutually acceptable resolutions with all of its constituencies” and to exit bankruptcy as quickly as possible.
All stores and operations are expected to continue without interruption.
A letter to Bi-Lo customers’ reads, “Let me first assure you, we expect it to be ‘business as usual’ at your Bi-Lo. We want to emphasize that meeting your needs remains our highest priority.”
“On an operational level, we are making significant progress this year and we have seen solid sales momentum and strong cash flow,” said Michael Byars, president and chief executive officer of Bi-Lo. “Our strong operations and liquidity position continue to demonstrate the strength of our business model, and the company has continuously satisfied all of its obligations to date, under the term loan and otherwise.”
Bi-Lo’s CEO said that in a “normal credit environment” the company would have refinanced the debt in the course of regular business on “reasonable terms.” But the grocery store chain found the current credit market “very challenging.”
“After extensive discussions with our lenders and careful consideration of all available alternatives,” Byers continued. “we determined that in order to maintain business operations and customer service without interruption while we address this debt maturity, a court-supervised restructuring is appropriate. We intend to move through this process as quickly as possible, and we firmly believe that this course of action will better position Bi-Lo for continued growth and long-term success.”
“Throughout this process, our doors will remain open and our commitment to our customers will not change,” said Byars.
During this period, Bi-Lo intends to fund operations primarily through its cash on hand and cash generated from operations. The company has received a commitment for a $100 million debtor-in-possession (DIP) facility arranged by GE Capital. Upon court approval, the financing will be used to help meet Bi-Lo’s normal business obligations.
Bi-Lo will seek approval of a number of customary court motions designed to support operations during the reorganization process. As part of these motions, Bi-Lo has asked a judge’s permission to continue paying wages and salaries and to provide employee benefits without interruption.
Bi-Lo expects its customer policies and programs, including its Bonuscard and associated promotions, returns/exchanges and other special promotions, to continue without interruption. During the restructuring process, supplier and business partners should expect to be paid for post-filing goods sold and services rendered to the Bi-Lo in the ordinary course of business.