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The Penn Traffic Co., which filed for Chapter 11 bankruptcy in November 2009, has entered into a “stalking horse” agreement with a joint venture comprising Hilco Merchant Resources, LLC and Hilco Real Estate Holdings, LLC, to act as the exclusive agent in the disposition of the Syracuse, N.Y.-based regional grocer’s real estate holdings and other assets.
A stalking horse agreement is an attempt by a debtor to maximize the value of its assets as part of, or in advance of, a bankruptcy court-approved auction. Under such an agreement, the debtor can offer breakup fees to its best bidder before the auction, enhancing the value of the offering for the bidder, and possibly resulting in a better price offer before the auction starts.
Chief among the Penn Traffic properties to be sold by Hilco Real Estate are leased and fee-owned grocery store sites in New York and Pennsylvania. These properties are in freestanding buildings and shopping center locations, and range in size from 10,000 to 50,000 square feet.
A division of the Hilco Organization, Northbrook, Ill.-based Hilco Real Estate helps businesses improve leverage and cash flow by repositioning and restructuring their real estate commitments. The company aims to optimize value in the shortest period of time.
Penn Traffic operates the banners BiLo Foods, P&C Supermarkets and Quality Supermarkets. Companies reportedly interested in purchasing all or some of the grocer’s stores include Tops Markets, LLC and Golub Corp./Price Chopper.