INDIANAPOLIS, IN - In the latest installment of turbulence from the retail arena, Marsh Supermarkets has announced that it has filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the District of Delaware.
"While today's decision was extremely difficult, we believe this action is necessary to preserve the value of the business as we seek a sale," said Chief Executive Officer Tom O'Boyle. "After reviewing every alternative, we concluded that Chapter 11 clearly provides the most effective and efficient means to ensure the best recovery for the Company's stakeholders."
According to a press release, the company has taken this step in order to continue business as usual while it continues seeking a buyer at all of its 44 locations. Filing Chapter 11 allows the 86-year-old grocery chain to remain open and serving customers, continue employing staff with their usual salary and benefits, and pay for the purchase of goods and services in the ordinary course of business. As is customary, the filing triggers an automatic stay, which precludes the company from paying amounts owed for pre-petition goods and services without a court order. Marsh also has sought approval to continue customer programs as normal, and to continue the closing store sales at select locations.
Marsh has asked the Bankruptcy Court's permission to use its available cash to fund operations during this period, since the company's secured lenders have already agreed to allow the company to do so. The retailer expects to have sufficient liquidity to fund operations throughout the sale process.
As we've previously reported, the company has been on shaky ground for a while, with rounds of prospective store closures in March and earlier this month. In recent years, the company has struggled to compete effectively against larger national and regional chains that have made the Indiana and Ohio grocery marketplace among the nation's most competitive.
According to the release, the crowded environment has led to price-cutting and other forms of promotional activity that have put profit margins under extreme pressure. Marsh has reacted this year by closing 21 unprofitable stores and, in late April, the sale of its in-store pharmacy business. The result is a chain of 44 stores that Marsh believes can be a valuable acquisition or merger partner for a grocery company or other buyer.
Earlier this month another supermarket chain, Central Grocers, also announced it was voluntarily electing for Chapter 11 Bankruptcy, while other retailers have been massively shifting strategies. As the retail landscape continues to shift with new formats and technology, how will traditional retailers fare? Continue checking in with AndNowUKnow as we report the latest.
