Bruno’s Seeks to Void Union Contract

JON SPRINGER

BIRMINGHAM, Ala. — Bruno’s Supermarkets has asked U.S. Bankruptcy Court here to void parts of its contracts with the United Food and Commercial Workers union, saying that successor agreements in the deals are an “impenetrable barrier” to a potential sale and survival of the chain.

A union spokesman told SN yesterday that it was willing to help, but that workers would not surrender benefits until Bruno’s showed it had “a credible perspective buyer.”

Bruno’s is seeking to sell the chain as a going concern so as to generate the best return to its creditors, but acknowledged in court papers this week it had to do so before its financing runs out in late May. It detailed a net loss of $45.7 million in 2008 and said its losses were expected to accelerate this year. Bruno’s said it would recover “tens of millions more in net proceeds from selling its stores as going concerns” than through a liquidation.

A sale, however, has been complicated by labor contracts with UFCW Local 1657, which contain a clause requiring a purchaser of the company to assume the existing contracts, which were reached in 2005, Bruno’s said. The retailer has four separate deals with the UFCW, the two largest of which expire in July. According to Bruno’s, potential buyers both before and after its Feb. 5 bankruptcy filing said they were not interested in acquiring the chain with the current labor agreement in place.

“What they want us to do is give up language these workers negotiated for themselves without anything being offered in return,” countered Corey Owens, a spokesman for UFCW. “As soon as the company can show us they are ready to keep good jobs in Alabama we’re ready to work with them to make that happen.”

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