Grand Union Chain Files For Bankruptcy Protection

TRENTON, N.J. (AP) — Supermarket chain Grand Union Co., debt-laden and fighting slumping sales at many of its nearly 200 grocery stores in the Northeast, filed for Chapter 11 bankruptcy protection Tuesday to help it arrange a sale.

This is the third reorganization petition the Wayne, N.J.-based chain has filed since 1995, but the first time the company has sought breathing room to find a buyer. A sale would probably result in some store closings and layoffs, a company spokeswoman said.

Grand Union said it has several potential buyers and has obtained a $60 million line of credit, plus commitments from its major suppliers to continue shipping merchandise.

The chain operates 197 stores in Connecticut, New Jersey, New York, Pennsylvania, and Vermont, down from 219 stores a year earlier.

Grand Union once had more than 900 stores from Florida to Canada and west to Texas. It sought bankruptcy protection in 1995 and again in 1998.

It emerged from bankruptcy protection in August 1998, but has since continued to lose money. In the quarter ended July 22, the company reported losing nearly $51.7 million as sales fell 4 percent to $658 million from $687 million a year earlier. Same-store sales declined 2.7 percent.

The company has about 13,000 employees and already announced layoffs twice this year to cut costs.

“We are evaluating a number of unprofitable stores,” said corporate communications manager Susanne Marsh. “We anticipate that about a dozen of these stores may need to be closed since a new owner or owners may not be interested in them.”

Marsh said those closures, which would happen before a sale is finalized, would result in job cuts at those stores.

Grand Union has sought a buyer since June. Analysts said potential suitors include distributors Di Giorgio Corp. in Carteret, N.J., and Brattleboro, Vt.-based C&S Wholesale Grocers Inc., or a real estate group.

Grand Union’s stock, which trades on the Over the Counter Bulletin Board since NASDAQ delisted it in July for dropping below minimum prices, dropped 36 percent Tuesday, from 17.1 cents to 10.9 cents per share.