Operating at a Profit
Bashas’ took several steps prior to emerging from Chapter 11 to tighten its belt, including eliminating a broad layer of middle management; renegotiating more favorable lease terms; cutting salaries and reducing payroll; selling liquor licenses; and putting in strict cost controls. As a result the chain has been operating at a profit since 2010, the year it filed, Basha said.
There’s also a renewed sense of confidence and “regained faith” among employees, customers and vendors, Basha told SN. “We’re a stronger company that’s better prepared to compete.”
In terms of meeting its financial obligations, Andersen said Bashas’ has “validated every one of our commitments in our plan of reorganization,” including the promise to pay 100% of its debts to all secured and unsecured creditors.
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“Despite advice from many experts to the contrary, we committed to repaying all our vendors at 100%, with interest plus related fees and costs — and all within three years — which is extremely rare in Chapter 11 cases,” Andersen noted.
By December 2011 — just 16 months after the company emerged from bankruptcy — Bashas’ refinanced all its secured debt with a new lender group, at which time it completely repaid its secured lenders.
That loan “dramatically punctuated the tremendous progress we had made,” Andersen pointed out. “It was one of the first tangible pieces of evidence that the plan of reorganization was working.
“That new financing package enabled us to repay our secured lenders more than a year ahead of schedule and provided the company with a revolving line of credit so it could operate more like a normal business, without having to rely exclusively on its own cash.”
Andersen had previously spent 40 years at Bashas’ before retiring in 2003 as chief financial officer to serve a mission for his church in South America. He came back a month after the bankruptcy filing with the title of chief restructuring officer and was named president and CEO in the fall of 2009.
Andersen originally said he would remain with the company for the three years it would take to see the reorganization plan through. His contract runs through the end of 2013, Basha said, “and we look forward to extending it,” he added.