Court Denies Bruno's Motion to Reject Its Current Labor Contracts

A U.S. Bankruptcy Court judge this week denied a motion from Bruno's Supermarkets, LLC to reject its existing labor contracts with the United Food and Commercial Workers (UFCW), according to a published report.

The Birmingham Ala.-based grocer, which filed for Chapter 11 bankruptcy in February, had contented that the union contracts are an obstacle to selling the company, particularly as they contain a "successorship clause" requiring any buyer to honor the current agreements.

Bruno’s motion asked the court to reject the current contracts so Bruno's and the union could fashion a new contract to facilitate the sale of some or all of the stores. The UFCW, however, had threatened to strike if the motion was granted. The strike will no longer be called, UFCW Local 1657 said.

According to Judge Benjamin Cohen, Bruno’s failed to prove that the union rejected the proposal "without good cause," The Birmingham News reported. A counterproposal from the UFCW to remove the requirement that the buyer assume the current pact in favor of requiring the buyer to negotiate a new agreement was "positive step" that could have led to further talks, the judge added in his opinion.

The company, which has 56 Bruno’s and Food World stores in Alabama and Florida, is slated to auction off its assets today.

Bruno's said it still believed the motion would have helped to save jobs by making some or all of the company's stores more attractive to prospective buyers. James Grady, the company’s chief restructuring officer, told the newspaper that no buyers he had met with wanted to assume the labor pacts with the successorship clause intact.
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