Marsh Files for Chapter 11
After months of store closings and reports of unpaid bills and other financial woes, Midwestern grocery chain Marsh Supermarkets has filed for Chapter 11 bankruptcy protection and is seeking a buyer for all or part of what remains of the 86-year-old company.
"While today's decision was extremely difficult, we believe this action is necessary to preserve the value of the business as we seek a sale," said Tom O'Boyle, CEO of the Indianapolis-based retailer. "After reviewing every alternative, we concluded that Chapter 11 clearly provides the most effective and efficient means to ensure the best recovery for the company's stakeholders."
The saga of Marsh’s downward spiral has unfolded on a near-daily basis. Just yesterday, the company revealed that it expected to have to shut down all of its stores within 60 days if it could not find a buyer.
All of Marsh's remaining 44 locations (down from 120 when it was acquired by Florida-based Sun Capital Partners in 2006) in Indiana and Ohio will continue normal operations throughout this process, Marsh announced early Thursday. Marsh has retained Peter J. Solomon Co. as investment bank to market its assets.
Marsh has asked the bankruptcy court's permission to use its available cash to fund operations during the process, as it expects to have sufficient liquidity to fund operations throughout the sale. The company also has sought approval to pay its employees and provide benefits as normal, to continue customer programs and to continue previously announced store closings.
Marsh Supermarkets was founded in Muncie, Ind., in 1931 by Ermal Marsh. One of its claims to fame is being the nation's first grocery chain to ring up purchases with electronic scanners; it also was first to adopt a system that wirelessly delivers coupons to customers' smartphones as they shop.
In recent years, Marsh has struggled to compete effectively against larger national and regional chains that have made the Indiana and Ohio grocery marketplace among the nation's most competitive, with Kroger, Meijer and Walmart among key rivals.
The crowded market amid the recent deflationary environment has led to price-cutting and other forms of promotional activity that have further squeezed profit margins. Marsh has reacted this year by closing 21 unprofitable stores and, in late April, selling its in-store pharmacy business to Hook-SupeRx LLC, a subsidiary of CVS Pharmacy.
The result is a chain of 44 stores that Marsh officials say they believe can be a valuable acquisition or merger partner for a grocery company or other buyer.