Winn-Dixie trade creditors ask for substantive consolidation of Chapter 11 debtors

By Caroline Salls

Pittsburgh, May 12 - Winn-Dixie Stores, Inc.'s ad hoc trade committee asked the U.S. Bankruptcy Court for the Middle District of Florida to substantively consolidate the debtors in Winn-Dixie's Chapter 11 case, according to a Thursday court filing.

The ad hoc committee was formed to investigate substantive consolidation issues from the perspective of Winn-Dixie's trade creditors.

According to the motion, substantive consolidation is appropriate in this case because there is a "substantial identity between the company's debtors."

On April 26, the trade committee requested an examination in connection with the role of the underwriters of the company's 2000 issuance of $300 million of 8 7/8% senior notes related to the substantive consolidation analysis.

According to that motion, the primary remaining issue in establishing a framework for a plan of reorganization is whether Winn-Dixie's estate should be substantively consolidated.

The trade committee said the note underwriters have information that will help it decide whether substantive consolidation is appropriate in Winn-Dixie's case.

Winn-Dixie, a Jacksonville, Fla., supermarket company, filed for Chapter 11 on Feb. 21, 2005 in the U.S. Bankruptcy Court for the Southern District of New York. The case was later transferred to the Middle District of Florida. Its Chapter 11 case number is 05-03817.

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