Central Grocers Headed for Bankruptcy?

Midwestern supplier to independent retailers Central Grocers Inc. is reportedly considering bankruptcy as it attempts to sell the supermarket chain it owns, while the union representing Central’s warehouse workers is suing to block the sale.

Grappling with mounting debt, the Joliet, Ill.-based cooperative is working with law firm Weil Gotshal & Manges LLP, investment bank Peter J. Solomon Co, and consultants from Conway MacKenzie Inc on reviewing strategic alternatives, including a debt restructuring, according to a Reuters report.

Sources told Reuters that Central Grocers, which distributes Centrella brand products to its member stores, is making contingencies in case the planned sale of its northwest Indiana-based Strack & Van Til grocery chain falls through. The name of the prospective buyer has not been disclosed.

Teamsters Union Local 703, which represents about 300 workers at Central’s Joliet warehouse, is asking a judge to temporarily stop the sale, according to an Associated Press report. The lawsuit argues that the sale could violate collective bargaining agreements.

As reported by Progressive Grocer earlier this week, the company aims to sell its 22 Strack & Van Til stores in northwest Indiana and metro Chicago to a buyer that will continue to operate them. In conjunction with the sale, the company plans to close nine of its Ultra Foods stores. Central also is reportedly considering the sale of its warehouse.