US regional grocer Penn Traffic has said it has filed for voluntary Chapter 11 bankruptcy protection for the second time in four years.
The Syracuse, New York-based grocery retailer, which operates more than 200 stores in six states, said it had secured a commitment of US$270m in debtor-in-possession financing from Fleet Capital Corp and a syndicate of other lenders, reported Reuters.
Penn Traffic said its decision to restructure under bankruptcy court protection was based in part on a decline in its liquidity resulting from the company’s declining operating performance during the fourth quarter of fiscal 2003 and the first quarter of fiscal 2004.
“The Chapter 11 filing will give us the flexibility we need to address the financial and operational challenges that have hampered our performance.” Joseph Fisher, Penn Traffic president and chief executive officer, was quoted by Reuters as saying.
Penn Traffic has been struggling amid a weak economy and fierce competition from discount retail giant Wal-Mart. The company also uncovered an accounting fraud at its bakery manufacturing division last September.
The grocer said its could sell or close some stores during restructuring and plans to emerge from bankruptcy protection as soon as possible.