Fleming Bankruptcy
Fleming is basically a U.S based grocery distributed and is known by the name Fleming Cos. Inc. It is very important to note here that it is the largest grocery distributor of the nation and thus, when the application for the bankruptcy was filed, it produced much surprise to everybody who hears that. It is also quite obvious that the reason for the Fleming filing the application for the bankruptcy must be also big otherwise the application would not have been filed. Let us discuss more about the Fleming bankruptcy in our next part of discussion.
Background of Fleming :
Let us see what is the background of the Fleming Cos. Inc. The Dallas based company has its office at 1945 Lakepoint Drive Post Lewisville TX. The official web site of the company is www.fleming.com. It can be easily said beyond any doubt that it is the largest multi-tier distributor of grocery that includes consumer package goods in the nation. The various products that are distributed by the company to the retailers include Target, IGA, Yes! Less, Rainbow foods, Philips66 etc. It is needless to mention here that these are all famous brands in the United States.
The idea about the huge operations of the company can be easily gathered from the fact that the company used to deliver goods to about 45000 supermarkets, convenience stores, gift shops etc across the nation. Thus, when such a big company would file an application for the bankruptcy protection, everybody would definitely be surprised from it.
As far as the distribution business of the company is concerned, the business of the company includes purchasing, warehousing, marketing, selecting and delivering the various groceries products, diary products, packaged foods and the beauty care items. The main constituent of the total business of the company is indeed the grocery that constitutes about 61% of the total items distributed by the company. Apart from the above, the company also purchases many items from the agricultural growers and distributes them. For consolidating the various purchases, the company has about 50 distribution centers across the nation that provides about 20 million sq. feet warehousing area to the company. The company has also retail segment that is being run by its various affiliates across the nation. The total number of the stores that are being run by the company under the retail segment is about 100 under the various names like Food 4 less, Rainbow etc. These retail stores cater to the need of middle and lower income group customers that are concentrated in Texas, Arizona, Minnesota, North California, Utah, Wisconsin and Louisiana. Thus, it can be said that the company has the retail chain across the nation.
Fleming Filling for the Bankruptcy :
It was on Tuesday, April 1, 2003 when the Fleming filed for the bankruptcy. It was a result of the events that led to Fleming loosing the essential supply agreement with one of its major supplier Kmart Corp. It was within just two months of loosing the agreement that the Fleming filed for the bankruptcy protection. In the application filed by the company, it said that this step would enable the company to realign the cost structure in a better way and the company would be able to reduce the debt also. Along with the company, its operating subsidiaries also filed application for the bankruptcy. Thus, the reason that was given by the company was to improve the capital structure and reposition itself for the various long-term goals. It is to be noted here that though the company filed an application for the bankruptcy, all the operations of the company are continuing in the same way as it were earlier. The company shall supply all the goods to its various customers as it has been doing in the past.
This step was indeed a shocking one for everyone who heard the news. Nobody would have imagined such a dramatic fall of Fleming because despite being the largest grocery distributor in the nation, it was showing excellent growth for the past many years. The Fleming was founded in Topeka. Though the company operations have spread to the whole nation, it still has a warehouse in Topeka and theyre about 150 people that were working there the day the Fleming filed the application for the bankruptcy protection. No other grocery distributor was as big as the Fleming was before the filing of the application for the bankruptcy protection. When the Fleming lost its essential supply agreement with Kmart, it indeed became the subject of investigations and probe by the securities regulators too.
Fleming, a Dallas based company, said in the statement that it was conducting its business of grocery distribution at all of its facilities. The papers for the bankruptcy protection were filed in the Delaware court. In the application, Fleming blamed Kmart for giving rise to circumstances that ultimately led to Fleming filing for the bankruptcy. The bankruptcy protection was filed under the chapter 11 of the U.S bankruptcy law. It is also important to note here that the essential supply agreement that was cancelled by the Kmart was a 10-year supply deal and it worth $4.5 billion. The agreement was signed between the two companies in the year 2001. Thus, it is quite clear that when such a huge deal would be cancelled, it would have serious implications too and that is exactly what happened.
As a repercussion, the trading of the shares of the Fleming Cos. Inc. was too suspended on the New York Stock Exchange the day the Fleming filed the application for the bankruptcy protection. The 52-week high to the stock was $26.10 and the price at which the stock was trading when the trading was suspended was just 50 cents. As a part of its reorganization plan, Kansas University former Chancellor Archie Dykes was elected as the chairman of the board of directors.
So, the Cancelleation of Agreement was the Reason :
After reading the above article, it can be rightly said that it was the cancellation of the agreement by the Kmart that led to the circumstances under which the company had to file an application for the bankruptcy. As far as the company statistics are concerned, there is absolutely no problem with them. The company is still continuing its operations and it is restructuring as well as diversifying its various activities to come out the chapter 11 provision related to the reorganization as soon possible.
Other Articles
