Grocer Bashas' files for Chapter 11 protection

LOS ANGELES Mon Jul 13, 2009 1:43pm EDT

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LOS ANGELES (Reuters) - Bashas' Inc, Arizona's largest family-owned grocery chain, has filed Chapter 11 bankruptcy protection as a weak economy and intense competition weighs on the supermarket industry.

In a filing on Sunday with the U.S. Bankruptcy Court for the District of Arizona, the company estimated both assets and liabilities at $100 million to $500 million.

The 77-year-old company, which is closing stores to cut costs, attributed the bankruptcy to increased competition from the likes of Wal-Mart Stores Inc (WMT.N), Tesco Plc's (TSCO.L) Fresh & Easy and La Suprema; the weak economy and Arizona's high home foreclosure rates; an ongoing union dispute; and tougher terms from its bankers.

Wal-Mart, which sells more groceries than any other retailer, is testing a new Hispanic-oriented grocery store called Supermercado de Walmart in Phoenix. The area around Arizona's capital is also home to Wal-Mart's smaller Marketside test stores which offer ready-to-eat meals and produce.

Bashas' recently lowered prices on thousands of products, a move that was countered by Fry's, a supermarket chain operated by No. 1 supermarket operator Kroger Co (KR.N), with a big advertising blitz.

Chandler, Arizona-based Bashas' said it employs more than 10,000 workers and operated about 158 stores under the Bashas' Supermarkets, Food City and AJ's Purveyors of Fine Foods names. Most of its stores are in Arizona.

(Reporting by Lisa Baertlein; Editing by Lisa Von Ahn and Richard Chang)

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