Filing Alert: #Tops Supermarket Files for Bankruptcy

Regional grocery chains continue to struggle as Supermarket chain Tops Markets filed for bankruptcy protection in Manhattan yesterday. (Is the re-pocalypse heading for your local grocer?  Learn more here.)

The Company

Tops operates 169 full-service supermarkets, 168 under the Tops trade name and one under Orchard Fresh. And franchisees operate five more. The markets are focused on key regions in upstate New York, Northern Pennsylvania, and Vermont.

Tops’ Bankruptcy Objectives

The company has identified three core objectives: reducing its debt, renegotiating or cancelling leases and supply agreements, and negotiating with its labor unions.

Tops hopes to complete its bankruptcy process in roughly six months. During its first three months, it plans to focus on creditor negotiations. Then, if all goes well, it will implement its negotiated plan. Towards that end, it has agreed to some milestones:

  • April 2, 2018: Entry of final orders approving its financing;
  • May 7, 2018: Execution of a restructuring support agreement with key lenders;
  • July 21, 2018: Filing of a disclosure statement and solicitation of a plan acceptable to its key lenders, with confirmation 60 days thereafter.

Financing to Support Its Operations

The company says it has sufficient liquidity to fund operations, and it plans to continue business as usual. It has been negotiating with an ad hoc committee of its senior secured noteholders regarding a “consensual deleveraging transaction.”  (In English, Tops has asked its secured lenders to forgive some of its debt.) That committee will provide a $125 million loan to support the bankruptcy filing. And Bank of America, the company’s asset-based lender, will provide a $140 million, revolving credit facility.

In addition, the court has authorized Tops to pay up to $10 million to vendors for goods delivered postpetition and up to $5.3 million for employee wages. And C&S Wholesale Grocers, which procures most of the company’s for-resale goods, has agreed to provide Tops with an additional week of trade terms.

Additional Information

On Friday, Feb. 23, at 2 p.m. Eastern, Reorg. Research will host a webinar about the case. Their team will provide an overview of the company and its financials and discuss the bankruptcy filing, including highlights from the first day hearing. If you have questions, stay for the Q&A session at the end. You can register here.

The Bankruptcy Docket

The case has been assigned to Judge Robert Drain (#18-22279 (RDD)). Tops is represented by Weil, Gotshal & Manges as legal counsel. Its investment banker is Evercore Group. FTI Consulting is the financial advisor. And its real estate advisor is Hilco Real Estate. The docket and additional information is available from Epiq, the company’s claims agent.
Mette K.

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