Shoppers Value Foods, a Louisiana-based grocery chain, has filed for Chapter 11 bankruptcy protection. The parent company, JHJ Inc., plans to reorganize and continue operations, according to attorney William Steffes of The Steffes Firm LLC in Baton Rouge, Louisiana.
Debt Tied to Winn-Dixie Acquisition Leads to Bankruptcy Filing
The bankruptcy filing, initiated in mid-November, stems from debt incurred from the purchase and rebranding of six former Winn-Dixie locations in 2018. Five of these stores have since closed, contributing significantly to the company’s financial distress. JHJ Inc. currently operates 12 Shoppers Value Foods stores, primarily in Baton Rouge, and one Food Depot in Bogalusa, Louisiana. The company employs over 600 workers across multiple locations.
Shoppers Value Foods Owes Millions to Former Supplier, Supervalu
Court documents reveal that Shoppers Value Foods owes over $7 million to its former wholesale distributor and supplier, Supervalu. The debt originates from promissory notes underwritten between May 2016 and November 2018. Supervalu was acquired by United Natural Foods Inc. (UNFI) in October 2018 for $2.9 billion. The bankruptcy filing states that the majority of the debt was accrued to purchase inventory for the former Winn-Dixie stores. The company defaulted on its loan from Supervalu several months ago and attempted unsuccessful out-of-court negotiations.
UNFI’s Role as a Major Grocery Distributor
UNFI, the largest publicly traded grocery distributor in the United States, serves a wide range of clients, including natural product superstores, independent retailers, conventional supermarket chains, e-commerce retailers, and foodservice customers. UNFI ranked No. 30 on Progressive Grocer’s 2019 Super 50 list of the top grocers in the United States. While UNFI acquired Supervalu, the outstanding debt from Shoppers Value Foods remains a significant factor in the bankruptcy proceedings.
Shoppers Value Foods Future Remains Uncertain
The future of Shoppers Value Foods remains uncertain as the company navigates the bankruptcy process. While JHJ Inc. intends to reorganize and continue operations, the significant debt burden and the closure of multiple stores pose substantial challenges. The outcome of the Chapter 11 proceedings will determine the long-term viability of Shoppers Value Foods and its ability to continue serving its customers and employees in Louisiana.
