UPDATED: Affiliated Foods Files Chapter 11 Bankruptcy

by Mark Hengel  on Tuesday, May. 5, 2009 3:03 pm  

Affiliated Foods Southwest Inc., a wholesale food distribution company, said it filed voluntary Chapter 11 bankruptcy Tuesday.

The company employs 530 people at its Little Rock warehouse. Most of them will be let go over the next month, Affiliated's Al Miller told ArkansasBusiness.com.

"We met with our employees today at about 11 a.m. and about half of those were released," Miller said. The employees remaining will continue to idle the company.

Affiliated said the governor's dislocated worker task force will begin meeting with employees "at once" to provide assistance. 

Workers were seen leaving Affiliated's warehouse on Monday with boxes of personal belongings. None would speak on the record, but most said they were taking belongings home in anticipation of the company closing its doors.

The company, which said last week that a sale or merger of the company was possible, announced its bankrupcty in a statement e-mailed to the press. It said "relationships with its primary lender group have continued to deteriorate, with product inventories being reduced drastically, which have resulted in losing a number of key customers."

It said that under those conditions, its board decided to file bankruptcy.

The company said it will also select corporately owned stores, and is currently soliciting buyers for its remaining stores.

If the stores "are sold off, it will not affect [the stores' employees'] employment," Miller said.

The company's remaining assets will be sold in bankruptcy, Miller said. Affiliated has been in discussions with possible buyers for some time, he said. Associated Wholesale Grocers Inc. of Kansas City, Kan., has been in contact with Affiliated about the assets, Miller confirmed.

"AWG is certainly a candidate to buy the assets of Affiliated Foods," he said.

AWG representatives declined comment.

In the past three weeks, Affiliated has depleted inventory at its Little Rock warehouse and was unable to fully supply its customers, Miller said. It notified partners a few weeks ago to enter secondary supplier contracts with other wholesale companies. Those secondary suppliers will now become primary suppliers, Miller said, ensuring what he called a "seamless" transition.

Affiliated operates corporate retail stores, including Harvest Food and Piggly Wiggly locations, with 900 employees. The company said it is now selling those stores. Some stores are planning to close, according to report Monday by Arkansas Business news partner Today's THV.

The company lists between 1,000 and 5,000 creditors in its bankruptcy filing, according to U.S. Bankruptcy Court documents. The company lists between $10 million and $50 million in assets and between $100 million and $500 million in liabilities, according to the filings.

In its statement, Affiliated reported $730 million in revenue for fiscal 2008, down from the $763.2 million it reported for fiscal 2007.



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