Failing chain down to 4 stores

Valu Food auctions two store leases with closing near

Supermarkets

March 29, 2000|By June Arney | June Arney,SUN STAFF

Bankrupt Valu Food Inc. auctioned off the leases yesterday for two of its six remaining grocery stores, one in Hanover and the other in the Gardenville shopping center in Northeast Baltimore.

The company, which has struggled for more than a year to emerge from bankruptcy, said it may accept bids for two other stores, even though it considers at least one of them too low. And it will continue to actively market the other stores.

Food Lion Inc. and Stop, Shop & Save each walked away from a bankruptcy auction yesterday with a winning bid for a store lease.

Food Lion submitted a bid of $60,000 for the lease at the Ridge View Plaza store in Hanover. "It fits into our marketing plan," said Roger Thompson, real estate representative for Food Lion. "We've been looking at a site almost across the street anyway, so it makes sense to use an existing building."

Once the deal clears U.S. Bankruptcy Court, Food Lion will renovate the store, a project expected to take about five or six months, Thompson said.

Stop, Shop & Save bid $65,000 for furniture, fixtures and equipment and the lease on the store in the Gardenville shopping center. But the landlord for that location was looking for performance assurances that had not been met as of late yesterday.

Bernard S. Denick, an attorney for Stop, Shop & Save, declined to comment on the deal.

Other Valu Food stores on the auction block yesterday are in Fullerton, Essex, Elkton and Parkville.

The Belair/Beltway Plaza store in Fullerton previously received a lease offer of $20,000 from its landlord, and the North Plaza Mall store in Parkville received a bid of about $290,000 from its landlord. Both offers are likely to be accepted, said attorney Joyce Kuhns, who is representing Valu Food Inc. in the bankruptcy proceeding. All the bids are subject to Bankruptcy Court approval during an April 6 hearing, she said.

An independent grocery chain, Valu Food was forced into bankruptcy after being battered by competition and its outdated supermarkets. The six remaining stores are currently open but are expected to close by next week, said Louis Denrich, president of the chain. Inventory is being sold at a 50 percent discount, he said.

Valu Food had 23 stores at its peak and 17 prior to filing for bankruptcy protection. Employees, which numbered about 300 a month ago, have dipped to about 50, Denrich said.

Denrich said he was not surprised that the auction, held at the downtown law offices of Saul, Ewing, Weinberg & Green, did not generate more spirited bidding among two dozen people who attended. In particular, the short leases on stores in Fullerton and Essex were not expected to inspire much bidding, he said.

Jeff Metzger, publisher of Food World, a trade journal in Columbia, agreed. "If this was 10 years ago, there might have been three times the players, but because the stores are smaller and the number of independents who typically look at smaller stores has dwindled, it's reduced the number of participants today."

A Dec. 31 reorganization plan, filed in Bankruptcy Court in Baltimore, is aimed at digging out from under about $12 million in unsecured debt and about $7.4 million in secured debt. But by the end of January, Valu Food had lost the support of Supervalu, the primary secured creditor, which was considered crucial for reorganization approval.

"I built this company from one store," Denrich said in an interview yesterday. "It's sad to end up where the stores are being auctioned off. It's like a funeral. But one part of me says, `I'm free to do something else.'"

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