Fresh & Easy Neighborhood Market Inc. filed for chapter 11 bankruptcy as the company prepares its sale by Tesco PLC to Yucaipa Companies LLC, and produce company creditors appear to be covered by payment plans.

“It’s a formality but it opens up the bidding,” said Ed Odron, owner of Ed Odron Produce Marketing & Consulting, Stockton, Calif. “You might see others come in, although we know from the past that if Yucaipa makes up their mind to go after it, they’ll get it.”

“Today’s filing is simply the next step in the restructuring process to sell the business to the Yucaipa Companies and will have no impact on our customers’ shopping experience,” Fresh & Easy spokesman Brendan Wonnacott said in a Sept. 30 statement. “It’s business as usual as we continue the transition to new ownership.”

United Kingdom-based Tesco plans to sell more than 150 stores and other assets in California, Nevada and Arizona to Yucaipa, whose managing partner is Ron Burkle. About 50 other stores are slated to close.

Fresh & Easy owes between $500 million and $1 billion, according to court records.

Perishable Agricultural Commodities Act and Packers and Stockyards Act claimants are owed about $12 million, Fresh & Easy reported. The company asked permission to pay a maximum of $5 million under PACA and PASA and the rest under administrative priority, which most of the creditors also qualify for.

The 20 largest creditors include Calavo Growers, owed $216,000, and Columbia Marketing International, $117,500. The biggest creditor is Harvest Meat Co., owed $1 million.

Tesco can terminate store leases easier under bankruptcy protection, paving the way for an acquisition at auction.

Fresh & Easy misread its customer base from its start in 2007, as Odron sees it. Closure, he said, “was a matter of when, not if.”

“When you say ‘Fresh & Easy,’ the first thing that comes to mind is a beautiful produce department with fresh fruits and vegetables all over the place,” Odron said. “It was kind of vanilla with premade sandwiches and everything wrapped. It wasn’t fresh. It might have been easy — grab-and-go stuff like you see at 7-11. But the presentation was underwhelming. We knew grab-and-go would be part of it, but the store was just a lot of cellophane and plastic.”

Yucaipa’s undisclosed bid for Fresh & Easy surprised Odron, who expected interest from retailers like Dollar General or Aldi that operate stores in the 15,000 to 25,000 square feet range.

“Yucaipa just seems like their format is more toward the Food 4 Less type of operation,” he said. “A price conscious customer, but with a bigger format. But they can bring in people who’ve been successful with their other banners to run that for them and turn it into a low-price operation with quality product.”

The prospect of a sale was in the air since December, when Tesco chief executive officer Philip Clarke said the chain wasn’t profitable enough to sustain its $1.6 billion investment. Yucaipa’s purchase for an undisclosed amount is expected to be final by the end of the year.

The stores, a distribution center and other assets were valued at $362.8 million in February. Pre-tax net losses were $258.5 million for the last fiscal year.

Tesco expects to spend the equivalent of $237.3 million on store closures and other expenses. Those include a loan of $126.6 million to the new company.

About 4,000 of Fresh & Easy’s more than 5,000 employees will keep their jobs. Yucaipa also acquires Fresh & Easy’s Riverside, Calif., distribution and production facility.