It is reported that a grocery chain named Fresh & Easy Neighborhood Market has declared bankruptcy. The venture had apparently been financed by a parent company named Tesco in the amount of $3 billion. On the other hand, Tesco has also removed $214 million from Fresh & Easy in what some may consider insider payments regarding what was owed. This amount would be the equivalent of 19 percent of Fresh & Easy's net revenues for the year ending on February of 2013. Absent other bids, Tesco may now be able to finance a sale of this business to another company in an effort to keep the venture running.
Tesco appears to not be the only company that potentially could have lost out over this deal. A number of creditors including commercial landlords may also take a loss and may be looking for solutions to having the debt paid back.
These creditors may be watching to find out if there were any improprieties in the manner that Tesco removed the $214 million. This could result in these creditors suing Tesco in hopes of getting some of the insider payments paid to them.
Chapter 11 will often protect major contributors to a turnaround from being held liable. However, under certain circumstances insider payments can be recovered by creditors in lawsuits as relate to Chapter 11 plans. In the above matter, it appears that negotiations will be ongoing as to how much unpaid creditors of Fresh & Easy could receive.
Creditors often need to have their interests protected through business litigation, and experienced litigation attorneys can advise creditors regarding their legal rights in these matters. In certain circumstances, these matters can be also end up being quickly settled to reduce costs that may come along with a protracted litigation.
Source: NASDAQ.com, "Tesco Took $214 Million From Fresh & Easy As Chain Failed," Nov. 11, 2013