Victory Park provides $56m to Mi Pueblo

The Northern California grocery chain has emerged from Chapter 11 with Victory Park's backing.  

Mi Pueblo Foods has emerged from a Chapter 11 restructuring with a new financial backer and new chief executive, according to a statement released on Wednesday.

As part of its restructuring, Mi Pueblo received a $56 million investment from distressed debt specialist Victory Park Capital, which will also provide “strategic guidance required to rapidly improve its operations and navigate the competitive grocery landscape,” according to a Victory Park statement.

Javier Ramirez will assume the role of president and chief executive of Mi Pueblo, which specialises in providing food to Northern California’s Hispanic community. He will take over for the grocery store chain’s founder, Juvenal Chavez, who has been named chairman of the board.

“The road ahead will not be easy and we know that there is much work to be done, but we have already started to implement aggressive initiatives designed to reposition Mi Pueblo as a profitable entity and as a strong contributor to our local Hispanic communities. We are confidently looking forward to this new stage in the company’s history and I personally am honored to join and support Mi Pueblo’s incredible team of professionals,” said Ramirez in a statement.

According to its July 2013 bankruptcy filing, Mi Pueblo had been current on its obligations to employees, suppliers, taxing authorities and creditors, but had reached “an impasse” over certain loan covenants with primary secured creditor, Wells Fargo Bank. The grocery store chain’s bankruptcy was also the result of an unliquidated claim of approximately $26 million, stemming from litigation with a former landlord.

Wells Fargo reportedly wanted to change the terms on its loans to Mi Pueblo after it became concerned with the company’s level of debt and forecasted revenues, according to The San Jose Mercury News. The company maintained operations through Chapter 11.

Chavez founded Mi Pueblo in 1991. The company maintains 21 locations across the San Francisco Bay Area, Monterey Peninsula and Central Valley.

Victory Park specialises in providing debt and equity capital to distressed mid-market companies. Previous food and consumer-related investments include smoothie chain Jamba Juice, household products company Fuller Brush, and Giordano’s, an Italian dining business.