US grocer Albertson's has been told that it cannot break supply contracts with bankrupt grocery wholesaler Fleming as it attempts to sell its wholesale business.
A bankruptcy court said the loss Albertson's contracts could see Fleming lose $10m in royalty sales and that the supermarket group must honour the contracts until the wholesale business was sold, or the contracts were “ended as irrevocably breached”.
Fleming hopes to sell the wholesale business to C&S Wholesale Grocers, who in turn, plan to sell the Albertson's contracts and some other assets to Associated Wholesale Grocers of Kansas City, a retailer-owned cooperative of 800 stores.
Albertson's could challenge Fleming's right to sell its contract to C&S and has sought $4m in arrears to cover lost customers and other alleged damage from Fleming since the distributor filed for Chapter 11 earlier this year.
A bankruptcy court said the loss Albertson's contracts could see Fleming lose $10m in royalty sales and that the supermarket group must honour the contracts until the wholesale business was sold, or the contracts were “ended as irrevocably breached”.
Fleming hopes to sell the wholesale business to C&S Wholesale Grocers, who in turn, plan to sell the Albertson's contracts and some other assets to Associated Wholesale Grocers of Kansas City, a retailer-owned cooperative of 800 stores.
Albertson's could challenge Fleming's right to sell its contract to C&S and has sought $4m in arrears to cover lost customers and other alleged damage from Fleming since the distributor filed for Chapter 11 earlier this year.
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