Disgruntled secured creditors of Bashas' Inc. are trying to block the Chandler-based grocer's emergence from bankruptcy under the current court-approved plan.
The company's bondholders and former bankers have asked the U.S. Bankruptcy Court to delay implementation of Bashas' Chapter 11 reorganization plan while they appeal its Aug. 13 confirmation by Judge James Marlar.
The reorganization plan proposed to repay all of the company's debts over a three-year period. It's scheduled to take effect on Aug. 27.
Bashas' is prepared to repay $59 million of its $300 million in total debts during the next few weeks and begin making installment payments on the balance. The secured lenders have asked the court to rule on Wednesday on their request for a stay.
As many as 15,000 of the company's unsecured creditors, many of them suppliers, backed the company's reorganization plan. But its bank lenders and its bondholders opposed it. They argued in a trial last month that the plan could leave the company undercapitalized and unable to make the proposed installment payments on the debt.
Bashas' countered that it has returned to profitability, through a substantial reorganization, and that it has the financial resources to repay its debts.
However, the appeal won't be heard by Marlar or the Bankruptcy Court. The secured creditors have exercised an option to have the appeal request heard by the U.S. District Court of Arizona.
The family owned company filed for a planned Chapter 11 bankruptcy reorganization in July 2009 after being stung by the global credit crisis, slowing growth and the hyper-competitive Phoenix-area grocery market. Bashas' said it had about $271 million in liabilities and $386 million in assets.
It had more than 155 stores but now has just 132, all but two in Arizona. The company also cut about 1,000 workers and renegotiated store leases to slash costs.
Besides Bashas' stores, the company operates Food City, which caters to Hispanic shoppers, and high-end grocer AJ's Fine Foods.