A U.S. brand affiliate of the U.K. grocery giant Tesco has filed for Chapter 11 protection recently. The chain has listed debts of somewhere in the neighborhood of $1 billion, according to sources. In a statement released by the company’s CEO he stated that the Chapter 11 filing was part of a restructuring plan and would have no effect on shoppers’ experience at the stores.
All stores in the U.S. chain will remain open during the Chapter 11 proceedings, and the pending sale of the Tesco-owned company to a Los Angeles billionaire will continue according to schedule.
The chain boasts just under 200 stores up and down the West Coast and in the Southwest. None of the stores will close due to the bankruptcy, says the bankruptcy lawyer, and most of the 4,000 company employees will be retained. The bankruptcy marks a blow for Tesco, the British grocery giant, which has been suffering of late from falling retail numbers in their U.K. and European stores, partly due to a report that found horse meat in several Tesco-brand products on shelves. No such products were or have ever been on offer at the U.S. chain, of course.
Tthe firm buying the stores after Chapter 11 on behalf of the Los Angeles billionaire will be receiving a $120 million loan from a Tesco-owned equity firm to help fund the sale, meaning that the affiliate will retain a nearly 25% share in the company.