Even Burkle Can't Save Grocer as Fresh & Easy Falls Again

Updated on
  • Yucaipa bought food retailer out of Chapter 11 two years ago
  • Chain joins A&P, Haggen among supermarkets in bankruptcy

Billionaire Ron Burkle couldn’t save Fresh & Easy Neighborhood Market Inc. from joining A&P, Pathmark and Food Emporium as the newest victim of a super-heated U.S. supermarket business dominated by Whole Foods Market Inc. and Trader Joe’s Co.

Burkle’s Yucaipa Cos. bought the grocery chain out of bankruptcy two years ago from Tesco Plc, the U.K.’s biggest retailer, which retained a stake. Tesco built Fresh & Easy in 2006 and 2007, at the height of the U.S. real estate boom. Since the 2013 bankruptcy, the chain struggled to remake itself as a fresh-food convenience store.

In addition to the big two, supermarkets “face strong competition from conventional convenience stores which are increasingly focused on delivering higher-quality food, grocery stores which are selling more prepared foods and fast-casual restaurants which tout higher-quality ingredients prepared in front of you,” Jennifer Bartashus, a Bloomberg Intelligence analyst, said before the filing.

Fresh & Easy will seek court approval of an accord signed with Hilco Merchant Resources LLC to dispose of its inventory and of any agreement to sell of some or all of its assets, according to court papers filed Friday in U.S. Bankruptcy Court in Delaware. The El Segundo, California-based retailer listed as much as $500 million in liabilities.

100 Stores

The chain -- with about 100 locations across California, Nevada and Arizona -- joins other troubled grocers that have filed for bankruptcy, including one also partly owned by Yucaipa that has also taken two trips through bankruptcy.

Great Atlantic & Pacific Tea Co., which operates A&P, Waldbaums, Food Emporium, Super Fresh, Pathmark and Food Basics, filed for bankruptcy in 2010 and emerged in 2012 as a closely held company part-owned by Yucaipa. It filed again in July and has begun selling stores.

Haggen Holdings LLC, another small West Coast chain, filed in September after taking on dozens of stores divested in the merger of Albertsons Cos. and Safeway Inc.

Tesco was owed $738 million in the previous Chapter 11 case and agreed to lend a Yucaipa unit $120 million to finance an acquisition. Yucaipa took over about 150 of the markets along with a production facility in Riverside, California.

Fresh & Easy’s largest creditors without collateral backing their claims include DPI West, with a claim of $1.86 million; United Natural Food West Inc., $1.98 million; and Ignited LLC, $1.42 million, according to court papers.

The case is In re Fresh & Easy LLC, 15-12220, U.S. Bankruptcy Court, District of Delaware (Wilmington).

— With assistance by Lauren Coleman-Lochner

(Updates with inventory sale agreement in fourth paragraph.)
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