Bi-Lo, Creditors File Reorganization Plans

JON SPRINGER

GREENVILLE, S.C. — Bi-Lo LLC and its creditors have separately filed official plans of reorganization in U.S. Bankruptcy Court here. Both Bi-Lo’s plan — sponsored by its owner, Lone Star Funds — and the creditor’s committee plan contemplate Bi-Lo continuing to operate as a going concern with a new infusion of cash, but they differ on how the retailer would manage potential litigation.

“Today marks a significant milestone and an important next step in our restructuring efforts,” said Michael Byars, president and chief executive officer of Bi-Lo, said in a statement Monday. “The two plans submitted before the court create additional choice for Bi-Lo’s creditors and encourage competition that we expect will maximize the value of the estate for the benefit of the company and its stakeholders. Further, the competing plans demonstrate the significant interest in our company and are a testament to our strong operational performance over the past several months.”

The Bi-Lo plan calls for a new equity investment of $150 million from Lone Star and $200 million in long-term financing. Bi-Lo’s official committee of creditors, along with its ad-hoc committee of term lenders, proposed a new equity investment of $79.5 million and new term notes of $164.1 million, backed by Bayside Capital and Wellspring Capital Partners.

Both plans propose that about $30 million in cash plus recoveries on account of any future litigation will be paid to unsecured creditors. But Bi-Lo’s plan assumes it would manage that litigation itself — and would likely not sue itself — while the creditors don’t make that promise.

“The committee would probably sign onto the debtor's plan if Lone Star would contribute a kiss and a cookie for the benefit of unsecured creditors,” Peter Chapman, a bankruptcy consultant, told SN after reviewing the plans Monday. “Bi-Lo would probably sign onto the committee's plan if the committee would give them a release from future litigation.”

Neither plan contemplates effects of a potential acquisition of Bi-Lo by Food Lion, which was revealed during the course of the trial.

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