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Report: Mi Pueblo Says It Might Have To Liquidate

Mi Pueblo signage

Mi Pueblo has limited options to re-emerge from bankruptcy protection and faces the possibility of having to liquidate its 21 stores and abandon its 3,260 employees, the company says.

The San Jose Mercury News reports that, in documents filed in federal bankruptcy court in San Jose last week, attorneys for Mi Pueblo asked Judge Arthur S. Weissbrodt to approve the company’s plan to emerge from Chapter 11 bankruptcy protection on May 14—or it will have no choice but to liquidate the 22-year-old chain of stores.

Through February, Mi Pueblo had a net loss of $14.5 million, according to court filings first reported by the Silicon Valley Business Journal. Only one bidder, the Victory Park Capital investment firm, is offering enough financing to allow Mi Pueblo to erase its debts, emerge from bankruptcy protection and continue operating, the company’s lawyers said.

“The plan submitted to the federal bankruptcy court this week positions Mi Pueblo well to move forward and to refocus on its core mission—to provide our customers with authentic products and services that are of the highest quality and freshness,” Mi Pueblo spokeswoman Perla Rodriguez said in an email to the Mercury News. “While there is still work to accomplish in the near term, we remain very confident that we will emerge from bankruptcy as a stronger and better capitalized company.”

Mi Pueblo operates 15 stores in the Bay Area, three along the Central Coast and three in the Central Valley.

Mi Pueblo began in 1991 when founder Juvenal Chavez opened his first 5,000-s.f. store called Country Time Meats on Story Road in East San Jose. In 2012, Mi Pueblo had annual sales above $350 million, according to court records. But in the first six months of 2013, sales only grew 0.6 percent.

Also in 2012, the U.S. Immigration and Customs Enforcement Service conducted an audit of Mi Pueblo employees that resulted in the company firing 80 percent of its workforce, the court filing said.

When Mi Pueblo filed for bankruptcy protection in July, the company’s attorney told the Mercury News that Wells Fargo wanted to change the terms of its loans after it became concerned about Mi Pueblo’s debt-to-credit ratio and its forecast revenues.

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