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Burkle's Fresh & Easy Is Said to Prepare for Bankruptcy Filing

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Burkle's Fresh & Easy Is Said to Prepare for Bankruptcy Filing

  • The Chapter 11 petition could come as early as next week
  • It would mark second filing since 2013 for California chain

Fresh & Easy Neighborhood Market Inc., the former Tesco Plc-owned grocery chain that billionaire Ron Burkle bought in 2013, is preparing its second bankruptcy filing in two years, according to people familiar with the situation.

An application could come as soon as next week, said the people, who asked not to be identified because the process isn’t public. The supermarket company could still find a buyer for all or part of the chain, a move that may forestall a filing, the people said.

Billionaire Ron Burkle

Billionaire Ron Burkle.

Source: Yucaipa Cos. via Bloomberg

An affiliate of Burkle’s investment firm, Yucaipa Cos., bought most of Fresh & Easy’s assets after it sought protection from creditors in 2013. The chain filed for bankruptcy after suffering from poorly located stores and intense competition in its Southern California home market. The company also cited the effects of the U.S. recession.

Representatives for Fresh & Easy and Yucaipa didn’t respond to requests for comment.

The move would follow the bankruptcy of Great Atlantic & Pacific Tea Co. in July, also for the second time. That company, once the nation’s largest grocery chain, had struggled with labor costs and more demanding vendors in recent years. Yucaipa owned part of that company as well.

Tesco, the British grocery giant, began building the Fresh & Easy chain in 2007, eventually opening about 200 stores in the Southwestern U.S. The idea was to cash in on the growing appetite for healthy and convenient meals, as well as the shift toward smaller-format stores. But its targeted audience of busy urbanites had ample options, including California-based Trader Joe’s. Tesco invested about 1 billion pounds ($1.6 billion) in the venture before deciding to bail out.

Fresh & Easy, based in El Segundo, California, now has about 100 stores. Tesco retains a stake in the business.

(Updates with Tesco's status in final paragraph.)