Although bankruptcy auctions are more commonly associated with Chapter 7 bankruptcy, they may be utilized in a Chapter 11 filing as well. This was the case for Belle Foods, a southern grocery store chain.
When a business is the subject of a bankruptcy auction, bids are often planned out in advance. At a bankruptcy auction, there is often a "stalking horse" bid presented prior to the auction itself that sets the initial minimum bid. While the hope is that higher bids will be submitted, a stalking horse bid could remain the highest offer at the close of the auction. Either way, a judge must approve the final bid.
Belle Foods is a name that is well known in the South. Many Georgia residents shop at the company's stores, many of which are operated under a different name, including Southern Family Markets, Piggly Wiggly and Food World. The Belle Foods empire went up for auction this week with a stalking horse bid of $16.3 million submitted by Associated Wholesale Grocers Inc.
Although this closed auction would sell off ownership interests, it does not mean that the 43 stores would close. For instance, if the stalking horse bid was accepted, Associated Wholesale Grocers Inc. would take over and leave the bulk of the stores open to consumers. Under this bid, only 13 locations would close.
At the time of the initial filing, the company employed approximately 2,850 workers. Since that time, a few locations have already been sold or closed.
Source: AL.com, "Belle Foods bankruptcy auction hopes to ring up high bids," Michael Tomberlin, Sept. 24, 2013