Winn-Dixie says creditors back bankruptcy reorganization plan

<p>Winn-Dixie Stores Inc. has taken a big step toward coming out of bankruptcy, saying enough of its creditors, including landlords and vendors, voted to approve the supermarket chain's reorganization plan.</p><p>The company filed the vote results in court Monday, but announced them Tuesday. The next step is a hearing Friday in which U.S. Bankruptcy Judge Jerry Funk will be asked to approve the plan. The Jacksonville-based company hopes to emerge from bankruptcy by mid-November with a new board of directors.</p><p>It filed for reorganization under Chapter 11 bankruptcy protection in February 2005 after suffering huge financial losses and a lack of vendor credit amid intense competition from Wal-Mart Stores Inc. and Publix Super Markets. It has since shed hundreds of stores and closed and sold warehouses while in bankruptcy.</p><p>The reorganization plan establishes 21 classes of claimants and gets rid of current Winn-Dixie stock. Creditors will receive from 53 to 100 cents on the dollar, depending on their class. The approval rates of the plan in each class ranged from 76 percent to 100 percent, above the amount necessary.</p><p>Fifteen objections to the plan were filed in court, with about half coming from current shareholders who will lose their money. In a Chapter 11 case, shareholders are the last to be paid and get nothing if there is not enough money to pay off creditors. Winn-Dixie's plan calls for it to issue new stock to creditors to pay off debt.</p><p>The largest current shareholder is the Davis family, which founded the company in 1925 and owns 51.7 million shares, or 36.7 percent. The Davis family had holdings worth $3.5 billion when the stock peaked in 1998.</p><p>Winn-Dixie is also disputing the amount of money it owes in taxes in several counties and states, including Duval County, where it is based. The issue is before Funk.</p><p>In court documents, Duval County Tax Collector Mike Hogan said the reorganization plan "is not feasible." His objection cites several legal issues, but also questions the chain's financial conditions.</p><p>"Winn-Dixie continues to lose money at an alarming rate. At the beginning of the case, Winn-Dixie's corporate representative testified the debtor had already 'turned the corner' and be profitable by July 2005. That prediction was obviously inaccurate," he said.</p><p>The reorganization plan projects the company will return to profitability beginning in its next fiscal year that starts in June. Winn-Dixie has reported losses of almost $1.3 billion over the past three years.</p><p>A key element of the plan would leave the company with minimal long-term debt after reorganization and $725 million in exit financing from Wachovia Corp.</p><p>Peter Lynch, the current president and CEO, is the only person that will remain from the current nine-member board of directors.</p><p>The chain now has 520 supermarkets and about 55,000 employees and operates stores in Florida, Georgia, Alabama, Mississippi and Louisiana. The company said the store closings and measures to slash overhead led to a $100 million reduction in annual costs.</p>

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