Faced with the prospect of a forced bankruptcy by its creditors, Midwest grocery cooperative Central Grocers Inc. has filed for Chapter 11 bankruptcy protection to allow the company to pursue the sale of its Strack & Van Til supermarket chain and other assets.
“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,” said Ken Nemeth, president and CEO of Joliet, Ill.-based Central Grocers. “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, while we work to sell the warehouse in Joliet and wind down our wholesale distribution operations.”
Several companies owed payments by the cash-strapped cooperative sought to force Central into immediate liquidation earlier this week, in an attempt to collect on their debts.
Meanwhile, all 22 Strack & Van Til, Town & Country Market, and Ultra Foods stores in Indiana and Illinois are open and serving customers as the company seeks a buyer.
“Our stores are open, and we are as focused as ever on supporting our customers and providing the legendary service that we are known for,” said Jeff Strack, president and CEO of Central Grocers subsidiary Strack & Van Til . “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.”
The company noted in a press release, “Strack & Van Til intends to pay vendors in full for goods and services provided on or after the filing date, May 4, 2017. … 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.”
Central Grocers anticipates that any sale transactions will be conducted pursuant to a court-supervised auction process under Section 363 of the U.S. Bankruptcy Code.
The company is seeking court authorization to continue to support its operations during the court-supervised process, including payment of employee wages and benefits. Additionally, it plans to seek dismissal of its creditors’ involuntary-bankruptcy case.
Meanwhile, Central Grocers is seeking layoffs of 549 workers at its Joliet headquarters, the Northwest Indiana Times reported.