The turnaround at US supermarket chain Bi-Lo has been thrown into disarray after the company’s unsecured creditors withdrew their reorganisation plan because the chain’s term-loan lenders – also proponents of the deal – withdrew their proposed investment.
Bi-Lo filed for bankruptcy in March after it was unable to refinance maturing loans due to the credit crunch.
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Bi-Lo’s 20 largest unsecured creditors are owed a combined total of US$36.3m, court documents have revealed.
The creditors formed a committee and submitted a reorganisation plan that was competing with a company-sponsored plan, which would see Bi-Lo’s current owner, Lone Star Funds, retain control of the group.
According to bankruptcy records, the creditors’ plan called for a total investment of $175.4m in new equity and a new credit facility. Term lenders had agreed to invest f $79.5m in new capital and approximately $100m of their debt into equity as part of a proposal.
Meanwhile, the reorganization plan filed by Bi-Lo that calls for a $350m cash infusion from Lone Star to be funded by a $150m new equity investment by the parent company and $200m in committed term-loan financing.
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By GlobalDataA spokesperson for Bi-Lo declined to comment on the news, but emphasised that the company continues to progress towards exiting Chapter 11.
Loan Star officials could not be reached for comment and it remains unclear how Bi-Lo’s bankruptcy case will proceed.
