The Netherlands Ahold said Tuesday it has filed papers with the U.S. Bankruptcy Court, District of South Carolina, to deny bankrupt supermarket retailer Bi-Lo a proposed $100 million financing package.
Bi-Lo, which initially filed for bankruptcy on March 24, said it has received a commitment for a $100 million debtor-in-possession facility arranged by GE Capital Financing, which it will use to meet normal business obligations upon court approval.
Bi-Lo has also asked for court permission to continue paying employee wages, benefits and salaries without interruption and says it will continue existing customer policies and programs, as well as normal business relationships with suppliers and partners.
According to Supermarket News, Ahold, which sold Bi-Lo to Lone Star Holdings in 2005 and remains a Bi-Lo landlord, said the proposed financing package would unfairly put lenders ahead of landlords with regard to collecting on pre-petition debts. Ahold has proposed its own $35 million loan to Bi-Lo in place of the GE Capital financing.
Bi-Lo operates 215 supermarkets in South Carolina, North Carolina, Georgia and Tennessee. Ahold, which operates U.S. grocery chains Stop & Shop, Giant-Landover and Giant-Carlisle, currently does not operate any stores in these states.
The U.S. Bankruptcy Court is expected to rule on the proposed GE Capital financing deal on April 3. Bi-Lo has also requested the court approve an emergency $21 million payment to C&S Wholesale Grocers, its largest supplier, with funds coming from the financing package.