The Drug Fair Group, a portfolio company of Sun Capital Partners, has filed for bankruptcy to have an “orderly” sale of its assets.
Drug store chain Walgreens said this week it bought 32 stores and prescription files from 11 of Drug Fair’s pharmacies. The sale needs approval from the US bankruptcy court in Delaware.
Drug Fair, which Sun Capital bought in 2005, runs 50 pharmacies in New Jersey.
Drug Fair secured a $40 million, four-month debtor-in-possession facility that will allow it to continue operating through the bankruptcy. The DIP loan needs to be approved bankruptcy court.
“After exploring alternatives following a thorough consultation with its legal and financial advisors, Drug Fair’s board of directors determined that an orderly sale of the company’s assets through a Chapter 11 process … would be the most prudent and effective way to maximize value for Drug Fair’s stakeholders,” the company said in a statement.
Sun Capital, which specialises in turnarounds, has made job cuts and closed its Tokyo office, due in part to the stagnant deal environment. Last year, its portfolio company Mervyns, a US department store chain that was struggling when Sun and Cerberus Capital Management purchased it in 2004, collapsed into bankruptcy and was forced into liquidation after failing to find a buyer.