Fleming Files For Chapter 11 Protection

Apr 02, 2003

By George Anderson

Fleming has filed for Chapter 11 bankruptcy protection following last week’s
announcement that the company’s creditors were unlikely to extend it additional

The grocery wholesaler has held discussions with vendors and others seeking
to obtain new short-term financing.

Fleming has been hurt by Kmart’s own Chapter 11 woes. In March, Kmart terminated
its 10-year contract with Fleming valued at approximately $4.5 billion by the

Sean Egan, managing director of Egan-Jones Ratings Co. told The Commercial
(Memphis, TN), “Kmart was akin to a hail-Mary pass in trying to pull
Fleming out of difficulties. Almost as soon as they put it in place, Kmart filed
for bankruptcy.”

Not everyone is glum about Fleming’s prospects however. Ron Margulis, (RW Commentator)
speaking on behalf of the National Grocer’s Association said, “We’re very strongly
supportive of Fleming, and we believe they’ll pull out and their independent
supermarket base will not suffer.”

Many independents supplied by Fleming also remain supportive. George Endrigian,
president, Shop ‘N Bag supermarket in Dresher, Penn. told the Dow Jones Business
, “We like Fleming. They’ve been good to me for a lot of years, and
you’ve got to stick with the people that put you there.”

Moderator’s Comment: What impact will Fleming’s Chapter
11 filing have on the wholesaler, its retail customers and the manufacturers
that supply it?

A number of independents expanded their roster of suppliers
when the Fleming/Kmart deal was originally announced. Should Fleming falter
(and let’s hope it doesn’t for the company, its customers and vendors) others
will be there to pick up the slack. [George
Anderson – Moderator

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