UTICA, N.Y. -- Victory Holdings here continued to sell off pieces of its New Almacs operation in New England last week.
Victory sold nine stores to its supplier, Supervalu, and three to independent supermarket companies for a combined total of $937,500 including leases and equipment. Supervalu, in turn, will likely resell the stores to independent operators in the area, according to sources.
During a hearing in U.S. Bankruptcy Court for the Northern District of New York last week, Judge Stephen Gerling approved the sales and ruled that New Almacs could immediately begin holding going-out-of-business sales to sell down the stores' inventories. New Almacs, based in Providence, R.I., filed for Chapter 11 bankruptcy protection in September along with parent company Victory Holdings and Victory's subsidiaries.
The company previously agreed to sell eight stores to Shaw's Supermarkets, East Bridgewater, Mass., for $13.6 million plus the cost of inventory.
Victory is left with seven New Almacs stores. Spokesman Thomas Murphy said the company is still searching for buyers for the remaining units.
The proceeds from the sale
of the 12 stores were significantly less than those from the sale of the eight stores to Shaw's.
When asked about this, Murphy said only, "We always try and maximize as much value as possible from the stores."
Supervalu, Minneapolis, will pay $690,000 for the New Almacs stores. Two of the units are located in Providence, R.I., and the others are located in East Greenwich, Warwick, West Warwick and North Kingstown, R.I.; and Fall River, Swansea and Blackstone, Mass.
Sources told SN the wholesaler is likely to sell the stores to independent operators in the area. Supervalu already operates distribution facilities in Andover, Md., and Cranston, R.I., which serve other East Coast customers.
An independent, Palmer, Mass.-based Sedar Foods Corp., agreed to purchase two stores in Pawtucket, R.I., for $135,000.
Rojack's Food Stores, a six-store operator in Mansfield, Mass., agreed to purchase one store in Seekonk, Mass., for $112,500. Rojack's is supplied by James Ferrera & Sons, a voluntary wholesaler in Canton, Mass.
James Ferrera & Sons and Shaw's were two of the original companies that had been approached about buying some of the New Almacs stores when Lazard Freres began marketing them in July. A New York-based investment firm, Lazard Freres was one of the original investors in Victory when the company underwent a leveraged buyout several years ago.
Murphy said Victory is identifying possible buyers for the remaining seven New Almacs units.
"Obviously, we would hope for and entertain any offers and [last week] there was expressed some interest by several parties," he added, but he would not specify what other companies were looking at the stores.
Other parties that were approached about purchasing New Almacs stores included Fleming Cos., Oklahoma City; C&S Wholesale Grocers, Brattleboro, Vt.; Bozzuto's, Cheshire, Conn.; Ahold USA, Parsippany, N.J.; Stop & Shop, Quincy, Mass., and Krantor Corp., Jericho, N.J.
The eight stores that are to be purchased by Shaw's were closed last week and will remain closed until the deal between Shaw's and Victory closes. At that time, Shaw's has said it plans to reopen four of the stores. There is no date set for the deal to be completed.
The remaining 19 stores, including the ones that already have buyers, initiated going-out-of-business sales last week. Merchandise was reduced by 20% to 50% and advertisements announcing the sales were placed in area newspapers, Murphy said.
Any merchandise not sold last weekend was scheduled to be liquidated. According to a court ruling, Supervalu will be able choose the liquidator.
With the proceeds from these sales, Victory will make an effort to pay off some of its creditors, including Supervalu.
During a hearing here two weeks ago, Paul Dzera, a project manager with Zolfo Cooper LLC, New York, testified that New Almacs would have run out of money this month.
At the same hearing, Clark Ogle, president and chief executive officer of Victory Holdings and its subsidiaries, testified that New Almacs had been financially troubled for some time.