Irvine Ranch Stores Sale Hits Snag : Boys Markets Parent Still Interested in 5 Profitable Sites

The company that owns Boys Markets has broken off negotiations to buy up to five stores from the bankrupt Irvine Ranch Farmers Market chain.

Even so, American Breco Corp., a holding company with interests ranging from real estate development to retailing, remains interested in buying the most profitable Irvine Ranch stores, a source familiar with the negotiations said Thursday.

If American Breco is able to acquire the stores, the Century City-based company would continue running them as a separate, upscale grocery chain, the source said.

The five stores eyed by American Breco include the chain’s most successful location at the Beverly Center in Los Angeles and four in Orange County, including markets in Tustin and Costa Mesa. Irvine Ranch has 11 stores throughout Southern California.

Irvine Ranch began talking to potential buyers after the Costa Mesa company--known for its fancy produce and fresh meats--filed in late July for protection from creditors under federal bankruptcy law, listing liabilities of $17.5 million.

Irvine Ranch recently closed its Northridge store and had hoped to soon reach a deal to sell its top five performers. The company has said it also hopes to sell its other five outlets.

Sell ‘As Many As Possible’

American Breco had been talking with Jon Hubbard, majority owner of Irvine Ranch, about paying at least $6 million in cash for those stores, said sources close to the negotiations. American Breco intended to contract with existing management to run the stores, a source said.

But on Wednesday, a representative of Irvine Ranch rejected a revised proposal from American Breco to buy fewer than five stores, sources said. “We’re not interested in selling one, two or three stores,” said Marc Winthrop, a bankruptcy specialist with the law firm Lobel, Winthrop & Broker, which represents Irvine Ranch.

“We’re interested in selling as many stores as possible.”

At a meeting of Irvine Ranch creditors on Wednesday, Winthrop said he told the group that Irvine Ranch’s sales have dropped 10% since the company filed for Chapter 11 bankruptcy protection on July 22.

But since then, Hubbard’s salary has been reduced by 10% from more than $250,000 per year, the attorney said. And the company now has more than $500,000 in cash, he said.

According to an industry source who asked not to be named, the negotiations with American Breco hit a snag because of its dissatisfaction with at least one of the leases on Irvine Ranch’s existing stores.

Officials with American Breco could not be reached for comment. Peter Sodini, president of its Highland Park-based subsidiary, Boys Markets, declined comment.

Boys Markets operates 53 supermarkets in Los Angeles and Orange County.

According to a source close to the negotiations, American Breco is still interested and now will try renegotiating Irvine Ranch leases with individual landlords. “Something should be done one way or another in the next couple of weeks,” the source said.

Even if American Breco steps out of the picture, however, Irvine Ranch has other potential buyers in the wings, said Winthrop. “We’re not necessarily dealing with sales, but with potential investors as well. We’re continuing to explore a number of alternatives,” said the Irvine lawyer.