A sale of Gordy’s Market in Ladysmith could occur this week.
The court-appointed receiver in bankruptcy proceedings against Gordy’s Market filed an emergency motion in Chippewa County Circuit Court on Feb. 11, requesting authorization to enter into a management agreement for the company’s Ladysmith store and to sell substantially all of the store’s assets free and clear of all liens, claims and encumbrances.
Called the “Ladysmith Sale Motion” in court documents, the motion also would grant authority to receiver Michael Polsky to disburse sale proceeds. A hearing is scheduled at 10 a.m. on Wednesday, Feb. 20, in Chippewa County Circuit Court before Judge James Isaacson.
Court documents cite an Asset Purchase Agreement for the Ladysmith Gordy’s Market, which Polsky believes will result in the highest and best bid under the circumstances.
The likely purchaser is Great Lakes Foods, a grocery supplier headquartered in the Upper Peninsula of Michigan. It serves independent grocers in Wisconsin, Michigan and Illinois from a 295,000-square-foot warehouse in Menominee, Mich.
A Great Lakes Foods spokesperson declined to comment.
Great Lakes Foods operates stores named Great Lakes Fresh Market in Augusta, Spencer and Osseo. Other stores under this names include sites in the Michigan cities of Marquette and North Muskegon. The company has stores named Great Lakes Foods in Tomahawk, Wis., and Menominee, Mich.
Under the agreement, Ladysmith Food & Beverage LLC has agreed to purchase the Ladysmith Gordy’s for $27,000 plus the value of the inventory on the date the sale is approved by the court. LFB also has agreed to hire substantially all of the employees of the store, in exchange for the receiver agreeing to continue operating the site in the ordinary course of business until the court approves the sale.
LFB will have 45 days to obtain all licenses and permits needed to operate the Ladysmith store. The closing will occur within five business days of LFB acquiring all necessary licenses and permits. Upon closing, Polsky will terminate the current lease between Gordy’s Market and the landlord of the Ladysmith store. LFB then will enter into a new lease agreement for the Ladysmith store.
The purchase agreement excludes any and all equipment or other personal property located at or used in conjunction with the fuel station adjacent to the store.
Under a management agreement, Ladysmith Food & Beverage shall assume all operations of the Ladysmith store between the court order and closing date.
The motion is the latest action in a lawsuit filed against Gordy’s Market by its food distributor, which is claiming $46.24 million in unpaid loan damages. Nash Finch Company filed the lawsuit in Chippewa County Circuit Court on Dec. 28, 2018. It seeks $46,238,152 from Gordy’s Market Inc. Court documents show this amount breaks down to:
• $43,325,002 in a “rebate-able incentive”
• $1 million principal on the note
• $1,913,129 for accounts receivable
There are six Gordy’s Market stores named in the complaint, including Ladysmith, Barron, Cornell, Chetek and two in Chippewa Falls. The Ladysmith Gordy’s Market is at 400 W. Ninth Street N., in a building owned by Reinhart Food Service.
A seventh Gordy’s Market in Eau Claire, which opened last year and receives groceries from a different supplier, is not named in the lawsuit.
Polsky, an attorney for the Milwaukee law firm Beck, Chaet, Bamberger & Polsky, was appointed to be the bankruptcy receiver for Gordy’s last Jan. 9. Prior to his appointment, Gordy’s began marketing the Ladysmith store assets on a going concern basis as operating sufficiently to avoid bankruptcy.
Gordy’s Market also participated in extensive negotiations with Great Lakes Foods and its affiliate, Ladysmith Food & Beverage, regarding a purchase agreement for the sale of the Ladysmith assets.
Wisconsin Department of Financial Institutions lists the Green Bay law firm Godfrey & Kahn as the registered agent office for Ladysmith Food & Beverage, which was organized on Jan. 23.
Polsky also continued negotiations with Ladysmith Food & Beverage regarding a purchase agreement for the Ladysmith assets.
Stakeholders with possible claims in the lawsuit that do not want the court to approve the Ladysmith Sale Motion or to ask the court to consider comments on the motion must have done each of the following:
• File a written objection to the Ladysmith Sale Motion on or before 4:30 p.m. on Monday, Feb. 18, explaining the factual and legal basis for the position, at the following address: Honorable James Isaacson, Chippewa County Circuit Court, 711 North Bridge St., Chippewa Falls, WI, 54729.
• Mail, fax or email a copy of the objection so that it is received no later than 5 p.m. on Monday, Feb. 18, to Michael S. Polsky, Esq.; Wis. Stats. Chapter 128 Receiver; Beck, Chaet, Bamberger & Polsky, S.C.; Two Plaza East, Suite 1085; 330 E. Kilbourn Ave.; Milwaukee, WI 53202. Telephone: 414 390-5935. Fax: 414 273-7786. Email: firstname.lastname@example.org.
• Appear and explain your position at the hearing, to be held at 10 a.m. on Wednesday, Feb. 20, in Chippewa County Circuit Court before Judge James Isaacson.
If stakeholders or their attorneys do not take these steps, Isaacson may decide there is no opposition and enter an order granting the requested relief.
A motion to sell “substantially all of the assets of Gordy’s Market Inc. free and clear of all liens, claims and encumbrances” for the remaining five Gordy’s stores also was filed this month in Chippewa County Circuit Court. The motion allows objections to be filed through 4:30 p.m. on Wednesday, March 6. The hearing date for this motion is 2:30 p.m. on Friday, March 8, in Chippewa County Circuit Court.
Polsky is working with the management advisory and restructuring services firm, Silverman Consulting, of Chicago, Ill., to assist with overseeing the Gordy’s Market operations and marketing and negotiating sales of assets.
“The receiver and Silverman have contacted potential purchasers in order to market the assets of [Gordy’s] in a commercially reasonable manner and maximize the value of the assets for the benefit of [Gordy’s] creditors,” court documents state.
As part of a marketing process, prospective purchasers of Gordy’s assets may be allowed access to store information in an on-line data room and to make site visits. Qualified bids will be allowed through the March 1 bid deadline to conduct a going concern auction.
Qualified bidders must submit $100,000 in earnest money to be deposited in a noninterest escrow account. Successful bidders will have these funds applied to the purchase. Others will have the funds returned.
The auction sale is currently scheduled for 10 a.m. on March 6 at the Milwaukee office of Godfrey & Kahn.
Prior to the auction, Polsky is allowed authority to enter into purchase agreements with potential buyers. He is also allowed to immediately seek court approval of any purchase agreements he determines to be the highest and best bids.
Gordy’s Market creditors have been given until April 24 to enter claims with the court. Last month, Gordy’s requested the lawsuit be dismissed and a jury trial be held.