US supermarket operator Eagle Food Centers has filed for Chapter 11 bankruptcy protection but hopes to keep its stores open while it carries out restructuring.
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The company, which operates 60 Eagle Country Markets and one Bogo’s Food and Deals supermarket in Illinois and Iowa, said it has received commitments for US$40m in debtor-in-possession financing from Congress Financial Corp, one of the company’s key creditors, reported Dow Jones News Service.
Eagle Food said that financing would enable it to meet its commitments to employees and suppliers as well as fund other day-to-day operations.
Eagle Food also said it was considering possible sale alternatives.
Robert Kelly, the company’s chairman, CEO and president, said the filing was necessary despite progress made in improving operations and reducing costs over the last two years.
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By GlobalData“Unfortunately, our cash constraints have made it increasingly difficult to service the company’s high-yield debt obligations,” he was quoted by Dow Jones News as saying. “We will need to make additional sacrifices and create an appropriate capital structure that will enable our company to be competitive in today’s environment.”
“Quite simply, our size combined with labour costs that are among the highest in our industry makes it difficult to compete with the low-cost operators in our markets,” he added.
