JOHNSON CITY, Tenn. -- White's Fresh Foods here said last week the U.S. Bankruptcy Court turned down its request to pay certain "critical vendors" for merchandise delivered in the weeks before the company filed for Chapter 11 protection.
As a result, White's will not get payment terms from suppliers and other unsecured creditors and will have to pre-pay for all shipments or make cash deposits -- a procedure the company is prepared to follow, Eddie Neely, chief financial officer for the 18-store company, told SN.
"We'll be living off cash flow for a while," he said, "but we hope to work our way out of that situation soon so our suppliers will have confidence that we will continue to operate and start giving us terms again."
White's filed for Chapter 11 protection on Aug. 2 as a way of developing a reorganization plan that will enable it to make payments to its senior secured lender, GE Capital Corp., for its outstanding debt of $3 million, Neely said.
White's operates 17 stores here in northeast Tennessee and a single store across the border in Weber City, Va. Sales last week were $110 million, Neely said.
The company is self-distributing, with a 110,000-square-foot dry grocery warehouse and a 50,000-square-foot perishables facility here. It also uses Fleming, Dallas, as a secondary supplier, Neely said.