Alisuper faces bankruptcy for the second time as its insolvency application has been torpedoed by its lenders yet costs keep rolling on, including staff wages which are months in arrears.
A workers’ demonstration in February had little effect on a management struggling to cope with €17 million owed to banks, the State and the stores' suppliers.
José Nogueira, owner of the Nogueira Group which bought the 50-store Alisuper group in March 2012 following its insolvency, was hailed by the then Minister for the Economy, Álvaro Santos Pereira as sending a clear message to other potential investors that "the Algarve remains a secure investment." Pereira was sacked in July 2013 to make way for the equally unimpressive Pires de Lima.
The earlier 2009 bankruptcy of the Alisuper group revealed accumulated debts of €80 million. The business was run at that time by the brother of the then mayor of Silves, Isabel Soares.
Nogueira Group soon ran into trouble with its Alisuper chain. It clearly had overpaid for the business, had taken on unquantified liabilities, lacked experience in running a supermarket chain and was trying to rescue a downmarket business during a prolonged recession.
At the end of 2015, the company applied for a Special Revitalisation Process(PER) to protect the business from creditors which proved to be uncooperative.
In January, Nogueira met with managers of Caixa Geral de Depósitos, the largest creditor which was owed more than €4.3 million, Montepio and Caixa de Crédito Agrícola Mútuo de Tábua e Douro.
"The impossibility of obtaining the consent of a majority of creditors to the recovery plan was noted," reads a letter from N&F Comércio e Distribuição Alimentar (the company Nogueira Group set up to run the Alisuper stores).
The company then asked the receiver to confirm N&F as bankrupt, reasoning that once the money runs so low that staff do not get paid, the stores will start to close.
With no agreement in place with the creditors, the company asked for insolvency not only for N&F, but for ACRN Comércio e Indústria de Carnes, part of the group which had become involved by underwriting an old loan to staff intent on rescuing the business in 2012.
The appointed interim trustee, Pedro Correia, now argues that the supermarket chain is not able to "fulfill its due obligations," and in a letter to the Court of Viseu, points out that N&F took over liabilities of the Alisuper group to the tune of €26 million but as early as 2012, found there were debts which the management had no idea existed.
Since then, a lack of working capital, poor sales and an increasing reliance on supplier credit has led to redundancies and the sale of stores to Pingo Doce and Intermarché.
From over 80 sites at Alisuper's height, just 25 remain with 129 workers owed €150,000 in wages and further payments outstanding to the taxman and to Social Security.
The interim trustee said that 2015 sales, "were below expectations, it no longer is possible to maintain the operation and tackle the current debt at the same time."
With total accumulated losses of over €32 million, the business is bust and sharks, like SPAR, are circling the injured business with promises of keeping jobs, just like José Nogueira said in 2012.
At least SPAR has a long and proud history of serving the lower end of the market and is looking at 12 of the remaining stores to turn into SPAR shops, bringing its presence in the Algarve up to 27 convenience stores.
A further issue is those workers who took out an underwritten loan of €1 million in 2012 to help stave off bankruptcy.
The loan was fully backed by N&F but as this subsidiary also has applied for bankruptcy, the staff may be faced with repayment in full in the absence of the guarantor.
If SPAR can not make this retail format work, then it really is time to call it a day as shoppers now are bewitched by the German Aldi and Lidl chains in a ‘high quality - low price’ market segment.
Why did fruit and meat magnate José Nogueira decide to buy Alisuper in the first place? The chain went bust for €80 million in 2009, looked little better back in 2012 and Nogueira had no track record in running a down market chain of food stores.
This may be a €32 million lesson in ‘sticking to what you know best.’
Comments
A small town like that can't support a lidl, Aldi, or other large store.