Fred’s has filed a voluntary Chapter 11 bankruptcy proceeding so it can conduct an orderly wind-down of operations.
The discounter has been operating stores throughout the southeastern United States since 1947. Fred’s uses a value-discount store format that offers value prices on everyday items, along with deals on closeout merchandise.
“Despite out team’s best efforts, we were not able to avoid this outcome,” Joe Anto, chief executive officer, said.
Going-out-of-business sales have already started at all of its stores, and are expected to be completed within 60 days. The company operated 568 stores across 15 states as of Feb. 2. But a series of hundreds of store closures over the last few months leaves it with just 75-80 doors across 11 states still in operation at the time of its Chapter 11 filing, according to court documents.
The court documents also note that its customers “often live in rural areas without access to large discount retailers.” Most of its products come from 1,100 vendors, with most based throughout the U.S. with a limited number of goods imported from China.
The Tennessee-based firm filed its petition in a Delaware bankruptcy court. The petition listed estimated assets at between $100,000 to $500,000, and estimated liabilities in the same range. However, as of May 4, four months before the filing and the July round of store closures that saw 129 locations shuttered, the company had $474.8 million in total assets and $380.2 million in total liabilities.
In its petition, Fred’s estimated that there would be some funds left at the end of the bankruptcy process to pay unsecured creditors.