Troubled grocery chain Fresh & Easy filed for Chapter 11 bankruptcy protection on Monday, in an effort to reduce its debt.
Fresh & Easy rented property before the recession, at a time when retail rental prices were high. After the market crashed, the chain reportedly failed to generate enough sales to become profitable.
In documents filed at U.S. Bankruptcy Court in Delaware, the chain stated it has more than $500 million to $1 billion in debt. The company’s assets were valued at more than $100 million to $500 million, according to the documents.
Bankruptcy protection may allow Fresh & Easy to exit its long-term leases, which could run 12 to 17 years, said Burt Flickinger III, managing director with consulting firm Strategic Resource Group.
The chain, recently announced it would sell more than 150 of its stores to Southern California investment firm, The Yucaipa Companies. Flickinger said he doesn’t believe the bankruptcy will impact the sale of those stores. He predicted that Fresh & Easy would try to exit the leases on other stores that do not have a buyer.
Brendan Wonnacott, a spokesman for Tesco, Fresh & Easy's parent company, said business will continue as usual.
"Today's filing is simply the next step in the restructuring process to sell the business to The Yucaipa Companies and will have no impact on our customers shopping experience," Wonnacott wrote in an e-mail.