DALLAS -- Fleming here is scheduled to take the next step toward its complete rebirth today when attorneys on both sides of the case ask a U.S. Bankruptcy Court judge to approve the company's reorganization plan.
"There are a number of objections filed to the plan, but we're hopeful that a number of those will be resolved prior to the confirmation hearing on the 26th," said James Sprayregen of Kirkland & Ellis, Chicago, which is representing Fleming in the case.
Fleming was one of the largest grocery distributors in the country before it filed for Chapter 11 bankruptcy protection in April 2003. Its reorganization plan calls for the company to emerge as a supplier to convenience stores via its Core-Mark subsidiary, which Fleming had acquired in June 2002 to diversify its customer base.
Sprayregen said each of the classes of creditors had voted in favor of the reorganization plan, a fact he described as being "quite significant." Two previous reorganization plans had been rejected.
He said attorneys for both the company and its creditors would ask the judge to overrule any outstanding objections at the confirmation hearing.
The remaining objections span across a broad range of topics. Many of the outstanding supermarket-based objections concern the disposition of facility standby agreements, or FSAs, in which Fleming agreed to hold the leases for retail customers in exchange for their wholesale grocery business.
Other objections included several from suppliers who oppose the structure of the reorganized entity.
The plan calls for certain creditors to receive an equity stake in the reorganized company, while others will receive cash payments through a trust. General Electric Capital is providing senior working capital for the new company.
"The premise was that Core-Mark needed to exit bankruptcy with a healthy capital structure, not burdened by the liabilities of the bankrupt entity," said Sprayregen. "By and large, everyone bought into the position that we needed to structure the various trusts and any Core-Mark residual liability to make sure Core-Mark would be free of any bankruptcy taint whatsoever."
