Fleming to Emerge from Bankruptcy

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Fleming to Emerge from Bankruptcy

DALLAS -- Grocery distributor Fleming Cos. has filed a plan to emerge from bankruptcy protection as a scaled-down business reorganized as a convenience store distributor built around its Core-Mark International division. However, the company could still liquidate by selling this last remaining operating division, according to an Associated Press report.

Fleming filed the reorganization plan in U.S. Bankruptcy Court in Wilmington, Del. The company said a date for a hearing on the plan had not been set.

Chairman Archie Dykes said the company would continue to evaluate offers that it expects to receive this month for Core-Mark.

Dykes said the plan to reorganize around Core-Mark has the support of the creditors committee and is designed to achieve the best possible recovery for creditors and opportunities for customers and employees, according to the AP report.

Core-Mark CEO J. Michael Walsh said the unit was "well-positioned to succeed, either under a new owner or as the foundation of the company's reorganization plan." He said the company's rate of filling customers' stores has increased to its highest level.

Core-Mark supplies more than 19,500 stores in 38 states and Canada, according to Fleming, which is based in Lewisville, Texas. Many are convenience stores, although San Francisco-based Core-Mark also serves drugstores, liquor stores and other retailers.

Since filing for Chapter 11 protection in April, Fleming has sold its retail stores and its main business as a supplier to grocery stores and other large retailers.

Fleming's prospects dimmed when it lost its largest customer, Kmart Corp., after the discount retailer closed hundreds of stores. Fleming is the subject of an investigation by the Securities and Exchange Commission, which is also examining whether suppliers helped Fleming manipulate revenue figures, according to the Associated Press report.

Stockholders' equity would be wiped out under the bankruptcy plan. The company would be owned mainly by general unsecured creditors, who would receive a pro rata share of equity in the reorganized company. The plan would provide cash distributions to some creditors, including holders of secured claims.