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5/10/2017 6:43:00 PM
Strack & Van Til owner $225 million in debt, eyes three more closings
The Strack & Van Til store in Valparaiso. Parent company Central Grocers has $225 millionin debt and is looking at closing three more stores. Staff photo by Tony V. Martin
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The Strack & Van Til store in Valparaiso. Parent company Central Grocers has $225 millionin debt and is looking at closing three more stores. Staff photo by Tony V. Martin

Joseph S. Pete, Times of Northwest Indiana

Strack & Van Til parent company Central Grocers, which is going out of business, revealed in a bankruptcy court filing it owes $225 million in debt and is looking at closing an additional three Strack & Van Til stores.

Central Grocers attorney Stephen Karotkin told a judge in a bankruptcy court in Delaware that the current buyer that's looking to purchase the remaining Strack & Van Til stores only wants 19 of them instead of the originally announced 22, so an additional three would close on top of the 14 that already have closed or are slated for closure this year.

The filing did not specify which additional three stores would close.

Central Grocers filed a transcript of the testimony of the Chapter 11 bankruptcy case in Delaware in a bankruptcy court in Illinois, where creditors like Coca-Cola and General Mills filed a Chapter 7 petition aiming to drive the century-old Joliet-based grocery wholesaler into bankruptcy and liquidate it.

The company, which had served 400 independent groceries across the Chicago area, is asking a judge in Illinois to dismiss the Chapter 7 case so it can go bankrupt on its own terms. Central Grocers is looking to close its 930,000-square-foot warehouse in Joliet and lay off 550 workers there, shutter 17 Ultra Fresh Foods and Strack & Van Til stores and sell off the remaining 19 Strack & Van Til stores.

Central Grocers wants to sell off the remaining Strack & Van Til stores to a buyer of its choosing in a bankruptcy court-supervised auction.

"We had hoped that we would have a signed stalking horse agreement before the cases were commenced," Karotkin said, according to the transcript. "As a result of the involuntary filing, we are here a little earlier than we anticipated. That agreement is in the process of being finalized in the near term."

Strack & Van Til, founded in 1959, once had as many as 38 stores across Northwest Indiana and the Chicago suburbs, and has long been considered the Region's hometown grocer after outlasting smaller rivals like WiseWay, PayLow and Burger's.

The Highland-based chain currently employs around 4,000 and has been one of Northwest Indiana's largest employers. It was acquired in the late 1990s by Central Grocers, which already has begun layoffs at the warehouse in Joliet that will close after it couldn't line up a buyer.

The cooperative's bankruptcy filing estimates it has $100 million to $500 million in assets, but owes $225 million to 10,000 to 25,000 creditors. The list of creditors runs nearly 500 pages long and includes many local municipalities, including Highland, Griffith, Lowell, New Chicago, Schererville, St. John and Winfield, as well as many local businesses.

Low prices, added competition and changing tastes ultimately did in Central Grocers after a century, Karotkin said.

"Challenges, Your Honor, include the highly competitive nature of the food industry and the shifting nature of consumer preferences and the growing presence of online retailers; additionally, the explosive growth in consumer demand for gourmet shopping experiences with offerings of organic and natural foods and the debtors' inability to devote substantial resources to that market contributed to the problems," he said.

"In addition, the phenomenon of increasingly low profit margins in the grocery industry and historically low prices in more recent years also contributed to why we are here today," Karotkin said. "The debtors also suffered from financial constraints, limiting their ability to make capital improvements and technological advances to customize and improve the customer experience."

Related Stories:
• More than 1,900 layoffs announced in 2017 at Strack & Van Til, Central Grocers
• Marsh plans to close all stores within 60 days if buyer isn't found
• What's next for brick & mortar retailers?
• OPINION: Retail apocalypse or business as usual?
• Are retail stores going away? At least 3,591 are closing their doors: Forbes.com
• Marsh Supermarkets files for Chapter 11 bankruptcy protection

Copyright 2017, nwitimes.com, Munster, IN






Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR


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