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A debt restructuring of Tops Friendly Markets was projected a month ago by Standard & Poor’s when it downgraded the supermarket chain’s rating.

Now, Bloomberg reports Tops Holding II Corp., the indirect parent to the grocery chain, is preparing to file for bankruptcy in the coming weeks, along with Bi-Lo, the company behind the Winn-Dixie chain.

Bloomberg, in a story published Saturday, says both chains are readying for bankruptcy, “according to people with knowledge of the matter” — but Burt Flickinger, a bankruptcy expert with the New York City consulting firm Strategic Resource Group, said he would take the report “with a proverbial grain of salt” and hopes it does not push the Erie County-based chain into filing for protection from its creditors.

Tops has seven stores in the region: Bolton, Chestertown, Corinth, Hoosick Falls, North Creek, Schroon Lake and Warrensburg.

Tops, according to its website, operates 169 full-service supermarkets, along with an additional five operated by franchisees under the Tops banner, and employs more than 15,000 people.

“With low margins and ample competition, the grocery business has always been challenging,” according to the Bloomberg article by Lauren Coleman-Lochner and Eliza Ronalds-Hannon. “But now the industry is contending with a more aggressive push by big-box retailers and Inc., which acquired Whole Foods last year to give it a larger brick-and-mortar presence. The moves threaten to force older chains to either consolidate or revamp their operations.”

When Standard & Poor’s downgraded Tops Holding II Corp.’s rating on Jan. 22, it noted a negative outlook.

The rating downgrade to CCC means the company is “currently vulnerable” and dependent upon favorable business, financial and economic conditions to meet its financial commitments.

“We believe the U.S. grocery store operator, Tops Holding LLC’s persistent underperformance will continue as it contends with heightened competitive pressures, increasing the likelihood of a debt restructuring,” the S&P report says. “The downgrade reflects our view that challenging conditions in the U.S. food retail industry will continue to weigh on Tops’ operating performance, pressuring the company’s already thin credit protection metrics and increasing the potential for a debt restructuring.”

On the same day, Reuters reported Tops had asked investment bank Evermore Inc. for advice on how to tackle its debt load.

Tops chairman and CEO Frank Curci had not commented publicly on the Bloomberg report, as of Monday evening, and Kathy Romanowski, public and media relations specialist for the company, did not respond to calls.

The situation is being closely monitored by United Food and Commercial Workers Local One, which represents 12,000 Tops employees.

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