Dec 02, 2009 Miranda L. Pennock Uncategorized
They’ve been in business for 67 years, but all those years don’t amount to much when the bills that need to be paid add up to more than the company’s income.
The announcement that Penn Traffic, the parent company of P&C grocery stores, was filing for Chapter 11 protection came as a shock to many small communities last month. Penn Traffic operates 79 stores in Pennsylvania, New York, Vermont and New Hampshire, a majority of which are P&C. They also are a parent company for Quality Markets and BiLo Foods.
According to Terry Kushner, vice president of advertising and marking for Penn Traffic, all stores are going to be affected by the bankruptcy and will cease operations as part of the proceedings, though when stores will officially be closed is subject to court proceedings.
Kushner said when it comes to the Chapter 11 proceedings, decisions are “completely out of the company’s hands.” Business decisions ultimately rest with the judge overseeing the bankruptcy process and the creditors. At this time, Kushner said there is very little solid, definitive information regarding how the bricks will fall.
“When there are definitive answers … we’ll be issuing updated statements,” he said.
Part of the bankruptcy process includes Penn Traffic selling off all assets such as buildings where the stores are located. There are 11 P&C locations in Onondaga County and three in Madison County, which all will be closing at some point in the near future.
“The company anticipates that through the Chapter 11 process it will continue to operate its stores while it undertakes a process of soliciting interest and bids for all or substantially all of its businesses and assets,” the Penn Traffic Company said in a statement. “That process is underway, and the company has entered into an arrangement with its secured lenders that is expected to provide sufficient liquidity during the process.”
While Kushner did not want to surmise when sales would be completed or who may be interested in purchasing the properties and other assets, he did say those stores will not be operated by Penn Traffic. The sale of assets works in a manner to permanently dissolve the company.
“There will be no P&C” after the sales are final, he said.
According to the statement, the entire sale process is subject to bankruptcy court approval, including the time period through which the company will continue to solicit bids, and the rules of the auction to be conducted at the end of the solicitation period.
“These issues have not been finalized,” Kushner said.
In all, the end won’t be in sight for a while as the bankruptcy process is long and entrenched in legalese and paperwork.
The bankruptcy court will have final authority to approve the winning bid or bids of sale before any agreement regarding the sale of the company’s assets will be effective.
According to a statement from Penn Traffic dated Nov. 30, since Nov. 18, when Penn Traffic and its subsidiaries filed voluntary petitions for protections under Chapter 11, the company has not sold or closed any stores.
Despite the lack of sales between Nov. 18 and 30, to comply with federal and state laws, Penn Traffic has issued “WARN” letters — Worker Adjustment and Retraining Notification — to its employees.
According to the U.S. Department of Labor, the WARN Act, which went into effect Feb. 4, 1989, offers protection to employees, their families and the community by requiring the employer to provide notice 60 days in advance of closings or layoffs.
The letters from Penn Traffic to its employees have notified them of the likely termination of their employment with the company as assets are sold off.
“The opportunity for our employees to continue employment with a purchaser of the company’s assets will depend upon the transaction(s) that develop during the sale process,” the company’s statement said.