Eagle Food Centers Inc, which owns and operates 61 supermarkets in Illinois and Iowa, announced April 7 that it and four of its wholly owned subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. The company has received commitments for $40 million in debtor-in-possession (DIP) financing from Congress Financial Corp.
Robert J Kelly, chairman, chief executive officer, and president of Eagle, said, “Over the past two-and-a-half years, we have made excellent progress in improving and strengthening the operating side of the business. We have significantly reduced corporate overhead and overall operating costs. Unfortunately, our cash constraints have made it increasingly difficult to service the company's high-yield debt obligations.”
Kelly emphasized that neither the employees nor customers of its retail supermarkets will notice any difference in operations as a result of the filing. The company said it also expects that customer programs and policies will remain unchanged.
During reorganization, Eagle will continue negotiations with its employee labor unions to renew and modify various terms of their collective bargaining agreements. The company intends to begin negotiations on a restructuring of the company's debt and is considering sale alternatives.
