Tops Files for Bankruptcy
After days of press speculation as to its financial health, Tops Markets LLC has revealed that it has filed for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. The Williamsville, N.Y.-based grocer described the move as “pursuing a financial restructuring in order to eliminate a substantial portion of debt from the company’s balance sheet and position Tops for long-term success.”
Despite the filing, “stores across the company’s portfolio in upstate New York, northern Pennsylvania and Vermont are continuing to serve customers with no impact to day-to-day operations,” Tops said. “The company fully expects operations to continue as normal throughout this financial restructuring process.”
According to the grocer, it’s “working cooperatively with certain holders of more than 65 percent of its Senior Secured Notes due 2022, and is continuing constructive discussions.” Tops has received a commitment for a $125 million debtor-in-possession (DIP) term loan financing facility from certain noteholders and a $140 million DIP asset-based revolving loan from Bank of America, which are intended to fund the company’s ongoing operations during the court-supervised restructuring period.
“Tops has built strong market share, and our stores continue to distinguish themselves by offering quality products at affordable prices with superior customer service,” noted Frank Curci, the company’s CEO. “We believe the financing that we received from our noteholders is a vote of confidence in our business. Our operations are strong, and we have an outstanding network of stores and a talented team to support them. We are now undertaking a financial restructuring, through which we expect to substantially reduce our debt and achieve long-term financial flexibility. This will enable us to invest further in our stores, create an even more exceptional shopping experience for our customers, and compete more effectively in today’s highly competitive and evolving market.”
Added Curci: “We are continuing to provide our customers the convenience, savings and friendly service that they expect from us. Our priorities, values and commitments to our customers and our communities will not change. On behalf of everyone at Tops, we thank our customers for their continued support and look forward to ensuring that their every need is met. I also want to thank our 14,262 employees and associates for their continued hard work and dedication.”
The company has filed a number of customary motions seeking the court’s approval to maintain its business operations during the restructuring, among them the continued payment of employee salaries and benefits without interruption. Tops also intends to pay vendors and suppliers in full under normal terms for goods and services provided after the Feb. 21 filing date.
The company has created a website on which it will post information relating to the restructuring.
Weil, Gotshal & Manges LLP is serving as legal counsel to Tops, Evercore as its investment banker and FTI Consulting Inc. as its restructuring adviser.
Tops’ imminent decision to file for bankruptcy due to an inability to pay off its debt in the wake of buyouts was reported last week by Bloomberg and others. Southeastern Grocers subsidiary Bi-Lo LLC is also expected to file for bankruptcy in the next month and shutter around 200 stores.
Williamsville, N.Y.-based Tops operates 169 supermarkets, with five more stores operated by franchisees under the Tops banner.