Penn Traffic files for Ch. 11 bankruptcy

SYRACUSE, N.Y. The troubled operator of three supermarket chains in the Northeast has filed for bankruptcy.

The Penn Traffic Co. announced Wednesday that it had voluntarily filed for Chapter 11 bankruptcy protection so that it could continue operating its stores while preparing to sell them off. Penn Traffic had announced earlier this month that it had entered a forbearance agreement with its lenders after defaulting on its loans.

The company said it would operate as “debtors-in-possession” under the jurisdiction of the U.S. Bankruptcy Court for the District of Delaware. The Syracuse, N.Y.-based company operates the P&C Foods, Quality Markets and BiLo banners in upstate New York, Pennsylvania, Vermont and New Hampshire.

“Our P&C, Quality and BiLo supermarkets remain open for business to serve our customers and communities,” president and CEO Gregory Young said in a statement. “We intend to continue to work closely with our vendor partners to provide the fresh products and good value that our customers have come to expect from our stores.”

Penn Traffic has suffered ill fortunes over the last year. In December 2008, it sold off its wholesale business to C&S Wholesale Grocers for $43 million, a month after it had closed two stores in Oswego, N.Y., and Lebanon, N.H. On Jan. 9, it announced plans to close an additional eight P&C Foods and Quality Markets stores in New York and Vermont.