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Bashas’ Family of Stores, the largest family-owned grocer in Arizona, voluntarily filed for reorganization under Chapter 11 on Sunday.
“We made this bold move to help preserve the business, and the jobs of our more than 10,000 employees,” said Mike Proulx, Bashas’ president and COO. “We did this to improve the health of the company as we navigate through difficult economic times. This filing helps us to stay on track with both the company’s short- and long-range plan, and to solidify our position as Arizona’s preferred local, family-owned grocer.”
“We are confident that our family of stores is here to stay,” said Edward “Trey” Basha, a SVP with the grocer and Basha family spokesman. “We’re not winding down operations, and it is not our intention to sell to another entity. We’ve been privileged to serve the needs of Arizona families for more than 77 years, and we’re committed to continue that tradition. The short-term plan is to emerge from Chapter 11 in the first quarter of 2010, and clearly, we’re developing long-term strategies to ensure future success.”
Bashas’ has financial backing and has obtained a debtor-in-possession loan commitment for $45 million to continue operations. “ABCO markets, Mega Foods and Southwest Supermarkets did not have that,” said Proulx referring to previous Arizona grocers that declared bankruptcy and whose stores were subsequently acquired by Bashas’. “It’s our intention to operate our business, so as not to impact our employee wages or benefits and to continue to provide fresh products at competitive prices for our customers.”
According to company executives, the filing decision was made after evaluating a combination of three factors:
-- The national credit crisis, which has caused credit markets to tighten
-- An especially challenging Arizona economy and stagnation of growth which has, in effect, caused the state to be “over-stored”
-- The repeated, ongoing attacks from the international and local grocery workers’ union, which Bashas’ says were “designed to defame and intentionally interfere with [its] operations”
Earlier this year, Bashas’ reduced its staff by more than 350 employees, and saidin April it would evaluate underperforming stores for potential closures. Last week, it identified 10 stores it will close by July 21.
An initial bankruptcy hearing is expected on Wednesday.
Chandler, Ariz.-based Bashas’ owns and operates more than 150 stores in Arizona, California and New Mexico under the banners of Bashas’ Supermarkets, Food City and AJ’s Purveyors of Fine Foods.