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Marsh to sell off stores, files for bankruptcy protection

Marsh Supermarkets has filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the District of Delaware, a step the company has taken to enable its business operations to continue normally as it seeks a buyer for all or part of the 86-year-old grocery store chain.

In recent years, the company has struggled to compete effectively against larger national and regional chains that have made the Indiana and Ohio grocery marketplace among the nation's most competitive.

The crowded environment has led to price-cutting and other forms of promotional activity that have put profit margins under extreme pressure. Marsh has reacted this year by closing 21 unprofitable stores and, in late April, the sale of its in-store pharmacy business to Hook-SupeRx LLC., a subsidiary of CVS Pharmacy. The result is a chain of 44 stores that Marsh believes can be a valuable acquisition or merger partner for a grocery company or other buyer.

"While today's decision was extremely difficult, we believe this action is necessary to preserve the value of the business as we seek a sale," Tom O'Boyle, chief executive officer, said in a statement. "After reviewing every alternative, we concluded that Chapter 11 clearly provides the most effective and efficient means to ensure the best recovery for the company's stakeholders."

All of the company's 44 locations will continue normal operations throughout this process.

The company has retained Peter J. Solomon Co. as investment bank to market its assets. As is customary, the filing triggers an automatic stay, which precludes the company from paying amounts owed for pre-petition goods and services without a court order.

The company has asked the bankruptcy court's permission to use its available cash to fund operations during this period, since the company's secured lenders have already agreed to allow the company to do so. The company expects to have sufficient liquidity to fund operations throughout the sale process.

Besides use of its cash, the company also has sought approval to pay its employees and provide benefits as normal, to continue customer programs as normal, and to continue the closing store sales at select locations.

Marsh Supermarkets was founded in Muncie, IN, in 1931 by Ermal Marsh. Throughout its history, Marsh has been a leader in technology, becoming the nation's first grocery chain to ring up purchases with electronic scanners and the first to adopt a system that wirelessly delivers coupons to customers' smart phones as they shop. As a company that has long been a landmark in its region, Marsh is hoping to find the right buyer so that it can continue to serve families across Indiana and Ohio.