U.S. Retailer Marsh Supermarkets Files for Bankruptcy

Bankcurptcy

Marsh Supermarkets, Inc., a retail food chain with stores throughout Indiana and parts of Ohio, filed for Chapter 11 bankruptcy in May, as it looks to sell off its remaining 44 stores. Founded in 1931 by Ermal Marsh, the business was running 116 supermarkets and 154 convenience stores in 2006 when Sun Capital took the company private for $325.0 million.

The Indianapolis-based Marsh operated as many as 86 stores in 2014, but that number has been steadily declining as the company closed underperforming stores. Stiff competition from larger grocery chains forced the company to close 21 stores in the first four months of 2017.

In April 2017, the company sold its in-store pharmacy business to a subsidiary of CVS Pharmacy (part of CVS Health Corp). Terms of the deal were not disclosed.

Marsh’s decision to sell its pharmacy business means it has had to exit the alcohol business. Because of Indiana law, Marsh is not allowed to carry on selling liquor in its stores once the pharmacies in those stores are sold off.

In Indiana, grocery stores can sell wine and beer, but not hard liquor. However, a grocery store that also includes a pharmacy can get a license to sell hard liquor. While wine and beer sales will continue in Marsh stores, liquor sales in the 37 locations where pharmacies are being removed will cease once the pharmacy operations end.

On the company’s decision to file for bankruptcy, CEO Tom O’Boyle said, “After reviewing every alternative, we concluded that Chapter 11 clearly provides the most effective and efficient means to ensure the best recovery for the Company’s stakeholders.”

In its Chapter 11 petition, Marsh listed assets and liabilities of between $100.0 million and $500.0 million. Pension costs alone amounted to more than $83.0 million. Marsh is looking to continue to pay its employees, provide benefits, and keep its stores running while it looks for a buyer.

The remaining stores “can be a valuable acquisition or merger partner for a grocery company or other buyer,” said Marsh in a press release. The company is looking to auction off its remaining stores on June 12.

Marsh has been in talks with interested parties about purchasing some of its 44 remaining locations. Rumors are that Giant Eagle, Inc., a Pennsylvania-based supermarket company with 400 stores from Indiana to Maryland, is looking at some Marsh locations.

The bankruptcy proceedings are an abrupt pivot for Marsh Supermarkets. Two years ago, O’Boyle said he wanted to open as many as 13 new stores by the end of 2018 and update 52 of the chain’s then-73 stores. Moreover, in December 2015, Marsh was looking to purchase other grocery stores.

Source:

Marsh Supermarkets Files for Bankruptcy, Looking for a Buyer,” The Wall Street Journal, May 11, 2017.

Are Marsh closings beginning of the end?,” IndyStar, April 21, 2017.

Marsh Stores Have Potential Buyers,” The Star Press, May 25, 2017.

Marsh Supermarkets, LLC Initiates Marketing Process for Remaining Stores,” PR Newswire, May 11, 2017.

Marsh is holding a huge liquor sale because of an obscure Indiana alcohol law,” IndyStar, May 1, 2017.

Struggling Marsh exits pharmacy business; sells inventory and records to CVS,” IndyStar, April 28, 2017.

 

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