Mi Pueblo Foods, the San Jose-based grocery chain that has a market in Mountain View, announced its formal exit from Chapter 11 reorganization Wednesday.
The company has also appointed a new CEO, Javier Ramirez, who comes with nearly 20 years of experience in the Hispanic food and grocery sector, the company said.
Mi Pueblo San Jose, Inc. had moved closer to exiting Chapter 11 on May 14, when a federal bankruptcy judge affirmed the company's amended reorganization plan. The plan allows the grocer to continue operating after it settled its financial differences with all but three of 29 creditors that had opposed the plan. Mi Pueblo will operate with normalized relationships with investors and suppliers under the plan, which was filed in federal court. No stores are expected to close.
Mi Pueblo received $56 million in financing from Chicago-based investment firm Victory Park Capital (VPC) as part of the financial restructuring. The firm specializes in non-traditional investments, focusing on credit and private equity in distressed and improving middle-market companies. The company also has experience investing in companies that serve the Hispanic marketplace.
Mi Pueblo began operations in 1991 and eventually grew to its 21-store presence today, with locations in the Bay Area, Monterey Peninsula and Central Valley. The stores offer products and an environment modeled after hometown markets found in Mexico and Latin America.
Mi Pueblo and its real estate firm, Cha Cha Enterprises, filed for bankruptcy protection in U.S. Bankruptcy Court in San Jose on July 22, 2013, after the chain was found to be out of compliance with a provision in its agreement with Wells Fargo Bank regarding profitability ratios. A federal immigration audit required Mi Pueblo to replace workers whose documentation was under review, which caused a substantial increase in payroll expenses, according to court documents. Prior to its bankruptcy filing, on May 25, 2013, Mi Pueblo owed workers more than $3 million in wages, taxes and benefits, and $1.5 million for time off and vacations, according to court documents. Mi Pueblo and Cha Cha's combined debts exceeded $36 million, according to court filings.
Under the reorganization plan, vendors entered into a minimum three-year trade credit plan under which they agree to continue to supply goods. Mi Pueblo paid off its undisclosed debt to Wells Fargo Bank and transferred certain assets from Cha Cha Enterprises to Mi Pueblo, including its check-cashing business.
"We have been a part of our communities since 1991, and thanks to the loyalty and support of our colaboradores (employees), vendors and customers during this difficult period, we can say that today marks the beginning of a bright, new chapter for Mi Pueblo," new CEO Javier Ramirez said in a statement. Mi Pueblo founder Juvenal Chavez will now serve as the company's board chairman.
"The road ahead will not be easy and we know that there is much work to be done, but we have already started to implement aggressive initiatives designed to reposition Mi Pueblo as a profitable entity and as a strong contributor to our local Hispanic communities. We are confidently looking forward to this new stage in the company's history and I personally am honored to join and support Mi Pueblo's incredible team of professionals," Ramirez added.
Under Ramirez, Mi Pueblo will focus on enhancing authentic Hispanic products, improving customer service and ensuring that products are sold at fair and competitive prices in the marketplace. The company also plans to introduce several new employee-benefit programs and initiatives focused on supporting local communities, he said.