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WASHINGTON - Milan, Illinois-based Eagle Food Centers Inc., which operates full-service supermarkets in Iowa and Illinois, is asking the bankruptcy court handling its Chapter 11 case to approve sale and bidding procedures for its assets.
Although the company said it doesn't have a prospective buyer for its assets at this time, it believes that formal, court-approved bidding procedures would attract interested parties, Dow Jones Newswires reports.
Under the bankruptcy code, companies trying to sell assets while operating in Chapter 11 protection must submit to an auction even when there is a buyer available for the property. The auction assures creditors that the best offer is obtained to provide the greatest recovery for debts.
According to court papers obtained by Dow Jones Newswires, Eagle Food intends to sell all of its stores and related inventory, as well as its infrastructure, systems and intangible property and related assets.
Parties interested in bidding must sign a confidentiality agreement and present financial information showing they can make the purchase.
Court papers said the bidding deadline is 4 p.m. CDT July 21, but can be extended if the company chooses to do so.
The company has proposed that a sale hearing take place Aug. 1 to approve the sale of its assets.
Eagle Food also is seeking permission to offer qualified bidders a termination fee of up to 3 percent of the proposed cost of the assets. The payment would only be made in the event that the assets that were bid on are sold to another bidder.
The company said the termination fee will encourage bidders to increase their bids, purchase a greater number of stores or infrastructure and provide terms that are more favorable to the company.
Eagle Foods filed for Chapter 11 bankruptcy protection April 7, listing assets of $180 million and debts of $177 million.