Bruno’s Files for Chapter 11

BIRMINGHAM, Ala. — Citing a tightening credit market and a soft economy, Bruno’s Supermarkets here filed for protection under Chapter 11 of the U.S. Bankruptcy Code Thursday.

The chain concurrently appointed Jim Grady, a senior director with the advisory firm Alvarez & Marsal, as its chief restructuring officer, effective immediately. Grady replaces Kent Moore, the company’s CEO since October 2007, who recently resigned to pursue other opportunities.

Bruno’s operates 66 supermarkets under the Bruno’s and Food World banners in Alabama and Florida.

Bruno’s, which was founded in 1933, has struggled with unstable ownership and shaky financial footing since the founding family sold the company to private investors in 1995. Bruno’s reorganized under Chapter 11 in 1999 and was sold to Ahold in 2001.

Ahold subsequently encountered its own financial troubles and merged Bruno’s with its Bi-Lo chain in South Carolina. Ahold in 2005 sold Bi-Lo to Lone Star Funds, a Dallas-based private equity firm. Lone Star eventually decoupled the chains again.

Bi-Lo is listed as Bruno’s second-largest unsecured creditor, owed just less than $3.5 million, according to the filing. Supplier C&S Wholesale Grocers is Bruno’s largest creditor, with $3.6 million owed to it. Other creditors include the state of Alabama ($2.5 million), Vertis Inc. and Cardinal Health.

Bruno’s officials told SN last year that the chain was rebuilding its infrastructure following the breakup with Bi-Lo and had expected to debut a new store prototype by early this year. It had retained a California-based marketing firm, Palladeo, to create a new look. In a petition filed last week, Palladeo is listed as Bruno’s eighth-largest creditor, owed $681,789.

“While Bruno’s remains a business with strong potential, a committed group of teammates, a well-recognized brand and a proud heritage, we are also a company that is challenged by the tightening credit market and the difficult market environment for retailers, especially grocery stores,” said Grady in a statement. “After careful consideration of all available alternatives, the company determined that filing for Chapter 11 was a necessary and prudent step that allows us to operate our business without interruption while continuing to implement our restructuring.”

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