ITHACA, N.Y. — Regional supermarket chain Tops Friendly market has filed for bankruptcy, according to a press release from the company this morning.
Tops filed for reorganization under Chapter 11 of the U.S. bankruptcy code in the U.S. Bankruptcy Court for the Southern District of New York. According to the release, Tops has secured a $125 million debtor-in-possession loan, or DIP, and a $140 million DIP asset-based loan, which will be used support the company’s operations while the court-supervised financial restructuring is underway. A DIP allows a company to keep going on the assumption that its continued operation will be worth more to creditors than closing the stores and liquidating the assets would.
“We believe the financing that we received from our noteholders is a vote of confidence in our business. Our operations are strong, and we have an outstanding network of stores and a talented team to support them,” stated Tops CEO Frank Curci in the press release. “We are now undertaking a financial restructuring, through which we expect to substantially reduce our debt and achieve long-term financial flexibility. This will enable us to invest further in our stores, create an even more exceptional shopping experience for our customers and compete more effectively in today’s highly competitive and evolving market.”
Tops, headquartered in suburban Buffalo, employs 14,262, mostly at its 169 corporate-owned and five franchise store locations across New York, Pennsylvania, Massachusetts and Vermont. Locally, Tops has two locations – at 710 South Meadow Street in the city of Ithaca, and at 2300 North Triphammer Road in the village of Lansing. Both stores were recently renovated.
Assuming the court raises no objection to the DIPs, day-to-day store operations are unaffected at this time. Stores will continue to be stocked and coupons and sales are still valid. It is not clear at this time if any Tops stores will ultimately be shut down.
The announcement was not unexpected, as rumors has been circulating earlier this month that both Tops and Winn-Dixie, a Southeastern supermarket chain, would be filing bankruptcy no later than the end of March. Reasons cited for bankruptcy include heavy debt loads by the chains, and an increasing competitive environment as mega-retailers such as Wal-Mart (Supercenters) and Amazon (Whole Foods) expand their presence within the grocery business. Tops couldn’t raise prices without reducing its share of the grocery business, and it was struggling to repay its massive debt.
More information for customers and vendors can be found at www.topsrestructuring.com.