Fred Files for Chapter 11 Protection

DALLAS, Texas – Fred's announced Monday that the company has filed a voluntary compensation claim under Chapter 11 of the Bankruptcy Code in the US District Bankruptcy Court of Delaware. The Company has also filed a motion seeking interim and final approval of the US Bankruptcy Court to enter into a Debtor-to-Operator Financing Agreement with some of the Company's existing lenders, providing for new financing of a maximum amount of $ 35 million.

The company said it was committed to an orderly liquidation of its business and began liquidation sales at all retail outlets, which are expected to close in the next 60 days. Fred's also indicated that he hoped to continue to enforce pharmacy orders in most of his facilities, while continuing to sell his pharmacy as part of the court-supervised procedure.

Fred's, which has been losing money since 2015, was trying to turn around its business. In April, it announced the closure of at least 159 underperforming and unprofitable stores, accounting for nearly 30% of its total points of sale.

"Despite all the efforts of our team, we could not avoid this result," said Joe Anto, Fred's General Manager. He continued, "I want to thank all of our employees for their hard work and continued support of the company as we downsize our operations."

Fred's filed customary law motions with the US Bankruptcy Court seeking various "first-day" relief measures for reporting entities, including allowing continued employee pay and salaries, and continuing to offer them uninterrupted benefits, as well as some other usual remedies.