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4-Traders Homepage  >  Equities  >  Nasdaq  >  SpartanNash Co    SPTN

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SpartanNash : Schafer fam­ily seeks to re­tain six Gordy's Market grocery stores

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09/29/2017 | 11:18am CEST

Sept. 29--CHIPPEWA FALLS -- The Schafer family is in negotiations to continue operating six Gordy's Market locations, their attorney said Thursday.

James Sweet, a Madison-based attorney, spoke after a hearing in Chippewa County Court, saying he represents the 26 Gordy's Market stores, GRS Trucking and the Schafer children.

Six stores -- Chippewa Falls downtown, Chippewa Falls on Lake Wissota, Barron, Chetek, Cornell and Ladysmith -- were pulled from Monday's auction.

"It was something we negotiated with (food distributor) SpartanNash," Sweet said. "It is an opportunity to keep the family in the grocery business on a smaller scale. Those stores would be sold to a new company, to a portion of the family."

It is unclear if those stores would retain the Gordy's Market name or if they would get a new identity.

Sweet said he will continue negotiations with SpartanNash later this week on the plan to allow the Schafers to retain those six stores, but he added he is confident the deal will come together.

During the court hearing Thursday, Chippewa County Judge James Isaacson approved the sale of 11 Gordy's Market locations -- five of which have closed -- to buyers who bid on them during an auction Monday in Milwaukee.

"I think it is appropriate to stop the bleeding and sell these stores," Isaacson said in making his ruling.

The stores that were approved for sale on Thursday were Black River Falls, Osseo, Augusta, Whitehall, Shell Lake, Spencer, Chippewa Falls Commons, Eau Claire Shopko Plaza, Eau Claire Hamilton Avenue, Hayward and Rice Lake.

Michael Polsky, an attorney who was appointed as receiver to oversee dissolving Gordy's Market and selling its assets, told Isaacson that some objections had been raised since Monday over the proposed sale of the stores in Arcadia, Galesville, Neillsville and La Crosse. Polsky asked that the approval of those sales be delayed while he investigates the objections; Isaacson set a court date for Oct. 27 to review those four sales.

"We are trying to preserve the value of the assets, not just to the creditors, but the people who work there," Polsky said.

SpartanNash will receive $886,000 combined from the sale of nine stores, while Settlers Bank collects $1.55 million for the sale of the Black River Falls store. Settlers Bank also obtained the Spencer location on a credit; no one bid on that store.

Isaacson approved the sales of the 11 stores despite the continued objections by two businesses that had submitted claims that Gordy's Market owes them money -- Huiras Construction and Northwest Wisconsin Refrigeration Services. Those companies made a similar claim at a hearing Sept. 15, which was rejected as well.

Christopher Stroebel, the attorney representing both of those companies, said he objected to the sale because the money goes entirely to the two entities that have the first liens -- SpartanNash and Settlers Bank.

Stroebel considered the auction to be illegal, and he sought to have Polsky removed as receiver.

"Unsecured creditors are out of the money -- they've been shut out," Stroebel said.

Sweet defended the work of Polsky and SpartanNash, along with Washington, D.C.-based Food Partners, which helped market and sell the stores. Sweet said the fact that Stroebel's clients, or others who don't have first liens, aren't receiving money doesn't make the sales illegal.

"This just makes it a very tragic circumstance for the family and the community," Sweet said. "We had a bunch of bidders step up. Those folks from Food Partners did a great job. The fact we got what we got (in the auction) is surprising."

Polsky agreed, saying that for the auction, he had 45 separate potential bidders and the auction lasted 11 hours.

"The sales are commercially reasonable," Polsky said. "The bids are all in excess of the underlying liquidation value."

There was one exception -- the Shell Lake store was sold for $1,000. Polsky praised Nash Finch for allowing the store to be sold for such a small amount, saying the food distributor didn't want to see a store close and its employees lose their jobs.

Before the auction on Monday, American Financial Network filed an objection in Chippewa County Court, claiming it leased several pieces of equipment to Gordy's Market locations, and the company contends those items couldn't be sold in an auction.

Polsky told Isaacson that he reached an agreement with AFN that the company would receive $73,617 at the closing of the stores in Arcadia, Galesville and Whitehall. An AFN attorney told Isaacson that the company has agreed to withdraw its objection to the sale.

While Isaacson did approve the sale of the 11 stores, Hilco Global is still working out what interior items are included in the sale of the Eau Claire Hamilton Avenue store and the Rice Lake building.

Contact: 715-723-0303, [email protected]

___

(c)2017 the Leader-Telegram (Eau Claire, Wis.)

Visit the Leader-Telegram (Eau Claire, Wis.) at www.leadertelegram.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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Timothy J. O'Donovan Lead Independent Non-Executive Director
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