When a troubled business is unable to service its debt or pay its creditors, it can seek protection in a federal bankruptcy court. Chapter 11 of the United States Bankruptcy Code permits businesses to reorganize and correct their financial problems.
Winn-Dixie Stores was founded in 1925 with a single grocery store and grew to become the eighth-largest food retailer in the United States. By 2004, the Jacksonville-based chain had more than 1,000 stores, but it was experiencing financial difficulties due to competition. Winn-Dixie filed for bankruptcy in 2005, announcing the sale or closure of 326 stores and the reduction of more than 22,000 jobs. Two things had to happen for Winn-Dixie to successfully reorganize; the first was to eliminate unprofitable stores, and the second was to improve service and sales in the surviving stores.
On November 9, 2006, Judge Jerry A. Funk approved Winn-Dixie’s plan of reorganization. Under the plan, Winn-Dixie obtained financing to support the company, as it made the changes necessary to compete effectively. The plan provided for Winn-Dixie’s creditors to be paid in cash with the company’s stock. Creditors now have a voice in Winn-Dixie’s operations.
Through the protection of Chapter 11, Winn-Dixie’s reorganization was successful and the company remains one of the nation’s largest food retailers, operating more than 500 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi.
Steve BuseyCounsel for Winn-Dixie
“Winn-Dixie had been a significant force in our community for many decades. The [United States] Bankruptcy Code and this court permitted Winn-Dixie to survive a financially turbulent period in its history and resume its role as a leading national food retailer, a large area employer, and a significant source of community philanthropy.”
(left to right) Various images of the interior and exterior of a Winn-Dixie store and its customers.