Central Grocers Files For Bankruptcy As Creditors Seek Payment

The grocery sector has largely managed to insulate itself from retail’s bankruptcy bug of 2017, but Central Grocers has succumbed to the “illness.” The grocery cooperative serving independent supermarkets has filed for Chapter 11 bankruptcy protection and will seek a court-led auction of its assets, including its distribution center in Joliet, Ill. and Strack & Van Til retail chain.

Central Grocers has notified employees that it plans to shut down the distribution center, putting nearly 550 people out of work by mid-July.

Strack & Van Til operates three brands across 22 stores in Indiana and Illinois: Strack & Van Til, Town & Country Market and Ultra Foods. In a statement, Jeff Strack, President and CEO of Strack & Van Til, asserted that the stores remain open for business. Strack & Van Til closed 14 other stores earlier this year.

The union workers employed at the facility had sought a restraining order to prevent a sale, but reportedly withdrew that request upon receiving additional information to review.

In the May 4 court filing, Central Grocers estimated that it had 10,000 to 25,000 creditors, with estimated liabilities of $100 million to $500 million and assets in that same range.

A coalition of the grocer’s creditors petitioned the U.S. Bankruptcy Court for a Chapter 7 bankruptcy case against Central Grocers, with Coca-Cola, General Mills Inc., Mars and Post Consumer Brands alleging that the cooperative owed $1.85 million in unpaid debts to the four companies.

According to the petition, Kellogg’s Sales Co. is Central’s largest unsecured creditor with a $3 million claim, followed by Kraft Foods ($2.35 million), Nestle USA (approximately $2 million), Tyson Foods, General Mills, Deans Foods, Unilever Foods, Dr Pepper7Up and Conagra Foods.

But Central Grocers plans to file a motion to dismiss the involuntary bankruptcy case in light of its voluntary Chapter 11 filing. Central Grocers stated that it “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.”