Bankrupt N.J. pharmacy chain to sell to Walgreens

Drug Fair Group Inc., the bankrupt New Jersey pharmacy operator owned by Sun Capital Partners LLC, won court permission to sell a majority of its stores to a unit of Walgreen Co. for about $56 million.

U.S. Bankruptcy Judge Brendan Linehan Shannon approved the sale after an April 24 auction where Walgreen was the lead bidder, according to papers filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware. Drug Fair said Walgreen's bid was the "highest and best" offer.

Walgreen, the second-largest U.S. drugstore chain, will purchase 33 stores and the assets of two other stores, according to Domenic Pacitti, a lawyer for Drug Fair. Deerfield-based Walgreen originally offered $54 million for 32 stores, according to court documents.

Drug Fair, based in Somerset, New Jersey, received authority on April 2 to hire Hudson Capital Partners LLC to conduct going-out-of-business sales at 23 stores that Walgreen didn't agree to buy, court papers show. Hudson guaranteed a recovery of at least 44 percent on the value of inventory.

Drug Fair, founded in 1954, is one of at least nine investments owned by Boca Raton, Florida-based Sun Capital to file for bankruptcy since the U.S. recession began in December 2007. Drug Fair sought court protection on March 18 after defaulting on credit agreements.

Drug Fair listed $120.3 million in debt and $90.7 million in assets as of July 26. The company, which operates under the Drug Fair and Cost Cutters names, sold assets of 13 stores to an unidentified buyer before its bankruptcy filing.