Court Orders Bruno's Auction

JON SPRINGER

BIRMINGHAM, Ala. — Bruno's Supermarkets will sell its assets at an auction later this month, according to an order by the judge overseeing the retailer's bankruptcy case.

Bruno's filed the “emergency sale” motion earlier this month noting that no buyers for the entire chain had come forward and that its lenders were getting anxious. Bruno's remains in talks with suitors for parts of the company, sources said, and could have “stalking horses” for the auction, which is set for April 29. Results are expected to be available the following day.

Bruno's was expected to publish a list of its assets to be sold in the auction late last week. The list would include its unexpired leases and contracts, along with proposed “cure amounts” on pre-petition debts. The company operates 56 stores in Alabama and Florida.

The auction may still be superseded by an offer to acquire the company prior to the event, but in court papers Bruno's has expressed that such a scenario would be unlikely. As of last week, parties in the case had acknowledged there was interest from buyers in some locations, but an acceptable offer had not yet emerged.

One such offer, solicited by Bruno's labor union, was “only marginally above liquidation value and filled with contingencies that are untenable,” Bruno's attorneys said in correspondence with Judge Benjamin Cohen.

The offer, from an unnamed bidder, was for 36 stores. But in addition to the low price, Bruno's said that requiring the company to maintain contract language would kill the potential to sell any more of the company.

Bruno's has been locked in battle with the United Food and Commercial Workers Local 1657 on Bruno's motion to reject the contract to facilitate a sale. That issue was still unresolved as of last week.

Two other potential buyers have been mentioned in court papers in recent weeks. One deal involved groups of stores being purchased by employee stock plans and a supermarket chain. Another potential buyer was identified as a private investor who would become chief executive officer of a small chain.

Bruno's filed for Chapter 11 protection in February, citing mounting competition, declining sales and tight credit markets that prevented it from paying for needed investments in its stores and infrastructure.

Bruno's, founded in 1934, at one time was its area's leading grocer but in recent years had lost considerable ground to competitors, including Wal-Mart and Publix. It has endured a string of ownership handoffs and a prior bankruptcy in 1998.

Ahold bought Bruno's out of bankruptcy in 2001 and later combined it with Bi-Lo. Many of Bruno's weaker stores were sold to supplier C&S Wholesale Grocers when C&S took over distribution for the chains in 2004.

The existing Bruno's and Food World stores were bought by Texas-based investor Lone Star Funds in 2005.