Chesterton Tribune

 

 

Strack Van Til's owner files for bankruptcy; stores still open

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By KEVIN NEVERS

The parent company of Strack & Van Til--Central Grocers Inc. of Joliet, Ill.--has announced that it’s filed for voluntary Chapter 11 bankruptcy relief.

The move comes two days after three of company’s creditors--the Coca-Cola Company, General Mills Inc., and Mars Financial Services--filed an involuntary Chapter 7 action against Central Grocers, alleging that the company “is generally not paying its debts as they become due, unless they are the subject of a bona fide dispute as to liability or amount,” according to the petition filed on Tuesday in the U.S. Bankruptcy Court for the Northern District of Illinois.

The total amount which those three companies claim Central Grocers owes them: $1,776,031.67.

In a statement released this morning, Central Grocers said that it’s filed for Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware, and that the company “has been cooperating with its lenders and expects to have access to sufficient liquidity to continue operating its stores and winding down the distribution center in an orderly fashion.

Meanwhile, the company said, “All 22 Strack & Van Til, Town & Country, and Ultra Foods stores in Indiana and Illinois are open and serving customers. Employees are receiving their full pay in the ordinary course. Strack & Van Til intends to pay vendors in full for goods and services provided on or after the filing date, May 4, 2017.”

“Our stores are open,” said Strack & Van Til President and CEO Jeff Strack. “And we are focused as ever on supporting our customers and providing the legendary service that we are known for. As we move through this process, our priorities, values, and commitments to our customers and our communities will not change. We thank our loyal customers for their continued support, and we thank our employees for their hard work and dedication.”

In April, Strack & Van Til confirmed that Central Grocers was looking to sell most of its Strack & Van Til holdings. Now Central Grocers is saying that those stores are still on the block and that it “intends to use this court-supervised process to conduct an orderly sale of its Strack & Van Til stores as going concerns and anticipates entering into a sale agreement with a stalking-horse bidder in the near future.”

Under a stalking-horse agreement, a debtor company offers the stalking-horse bidder certain protections prior to any auction of the debtors assets. The stalking horse’s bid then becomes the starting, minimum bid of the auction. Should the stalking horse subsequently be out-bid, the debtor company can pay so-called “breakup fees” to the stalking horse as well as reimburse it all expenses incurred to date.

Central Grocers did not release the name of the possible stalking horse.

“In light of the increasingly difficult environment for independent supermarkets and retailers, we have been working tirelessly to achieve an outcome that is in the best interests of our stakeholders,” Central Grocers President and CEO Ken Nemeth said. “We are using this court-supervised sale process to provide us the time and flexibility to conduct an orderly sale of the Strack & Van Til stores.”

In addition to its Chapter 11 filing, Central Grocers said that it’s filed “a number of customary motions seeking court authorization to continue to support its operations during the court-supervised process, including the payment of employee wages and benefits.”

Central Grocers is also seeking the dismissal of the involuntary Chapter 7 filing in the U.S. Bankruptcy Court for the Northern District of Illinois.

Shortly after news broke of Central Grocers’ interest in selling the 22 Strack & Van Til stores, Teamster Local 703 filed a suit seeking to block any sale, on the ground that such a sale could violate its labor agreements covering 300 members at Central Grocers. Local 703 later dropped the suit, after receiving “certain assurances from Central Grocers regarding a potential transaction and receipt of certain confidential information that will allow the Teamsters to better assess the transaction,” Local 703 said at the time.

Central Grocers is the seventh largest retail cooperative in the country, supplying some 400 independent supermarkets in Chicagoland. It was originally incorporated in 1917 and is the exclusive distributor of Centralla Brand foods.

In December 2012, Strack & Van Til purchased eight groceries owned by WiseWay Supermarkets, including WiseWay’s Chesterton location at 1600 Pioneer Trail. Strack & Van Til immediately undertook a major remodeling of the former WiseWay, which opened in February 2005. That 60,000-square foot grocery nearly tripled the space of the old WiseWay--formerly Costas Foods--located at Broadway and Eighth Street in Chesterton.

 

 

Posted 5/4/2017

 

 
 
 
 

 

 

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