Affiliated Foods Southwest, Inc. files for Chapter 11 - KCBD NewsChannel 11 Lubbock


Affiliated Foods Southwest, Inc. files for Chapter 11

LITTLE ROCK, AR (PR) - Affiliated Foods Southwest, Inc. a wholesale food distribution company providing product, services and technology for independent food retailers in a 6-state area for over 50 years filed for Chapter 11 bankruptcy Tuesday.  The company reported $730 million in revenue for fiscal 2008. 

Affiliated announced on March 14, 2009 plans for reorganization due to cash flow difficulties, with the company's primary lender US Bank temporarily cutting off credit, furthering the liquidity setback.  Over the past 7 weeks the company has replaced management and installed reorganization procedures, including negotiations with other food wholesalers for a buy-out.   During that time relationships with its primary lender group have continued to deteriorate, with product inventories being reduced drastically, which have resulted in losing a number of key customers.  Under these conditions the Board of Directors was compelled to file for bankruptcy protection and to maximize the value of assets for liquidation. 

The distribution center located southwest of Little Rock on interstate 30 currently has 530 employees.  The Governor's dislocated task force will begin meeting with these employees at once to provide assistance.  Affiliated operates a number of corporate retail stores with 900 employees at those locations.  Currently those stores are being sold and should provide continued employment.   

The company services over 400 supermarkets in Arkansas, Louisiana, Mississippi, Oklahoma, Tennessee and Texas.  These independent grocers have been given advance notice that they should secure secondary suppliers, due to Affiliated's decrease in service level of product.  This will allow these supermarkets to now make those secondary suppliers their primary source of supply, which will allow continued customer service in their markets.  For this reason the company believes these independent grocers should be able to provide the same high quality service to its customers they have provided in the past.

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