NEWS

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November 9, 2007

Co-Op considers bankruptcy

[img id="80273" align="alignleft"] Facing financial turmoil, the Hyde Park Cooperative Society, which operates the only supermarket currently open in the U of C’s neighborhood, will present a series of options to shareholders later this month that could result in a declaration of bankruptcy and the closure of the 55th Street location.

According to James Poueymirou, president of the Hyde Park Co-Op’s board of directors, the board is currently weighing three options to present to shareholders. The first option is a commercial loan from an outside lender that would lead to the continued operation of the store.

The second possibility is a debt workout involving the landlords of the 55th and 47th Street locations and all of the Co-Op’s vendors, which would likely result in closure, Poueymirou said.

The third possibility is bankruptcy—either a reorganization of the store would allow it to remain open, or debtor-in-possession financing would result in closure. In this last case, known as bankruptcy liquidation, a third party provides funds for repayment of obligations.

“There are two options that would keep the store open and two that would keep it closed,” Poueymirou said. “The truth is that the store is insolvent and has been insolvent for some time.”

In order to move the process forward, Co-Op Markets will host a town hall meeting on November 18 in the Hyde Park Neighborhood Club to discuss the options. Ballots will be mailed out to all shareholders beginning on November 19, Poueymirou said. The election period will last three weeks, and shortly afterward the results will be announced. Poueymirou said that the voters’ decision will most likely be the final one.

Poueymirou said the grocery stores’ financial troubles could be traced back to the expansion beyond the original 55th Street location to branches at 47th and 53rd Streets.

“In expanding to both sites, there wasn’t sufficient sales activity that justified those activities, so all the income from the 55th Street store was going to offset expenses at the other two locations,” Poueymirou said.

In February, the Co-Op and the University negotiated a termination of the lease for the 53rd Street Co-Op. In May, the board began an analysis of the Co-Op’s financial situation. The 47th street location closed in 2005, but the Co-Op has continued to pay rent for the building.

“Access to high-quality grocery shopping has a direct impact on the quality of life for our faculty, staff and students, and thus our ability to attract people to our community and retain them once they are here,” Hank Webber, the University’s vice president for community and government affairs said in an e-mail to the campus community. “Having a successful store in this location would keep shoppers and businesses in the neighborhood and bring new business to surrounding retailers.”

The University serves as the landlord for the Hyde Park Shopping Center, which includes the 55th Street Co-Op. According to Webber, the Co-Op currently owes the University approximately $1.2 million in unpaid rent. Under one option, the University would forgive most of the Co-Op’s unpaid rent and help them repay their vendors, while facilitating the opening of a new grocery store on 55th Street within two weeks of the closure.

“The University is supportive of the board’s efforts because we believe our community deserves to have a high-quality grocery store,” Webber said. “If the Co-Op cannot fulfill this role, then we are committed to facilitating a new grocery store coming to the 55th Street location.”

The Co-Op began in 1932 as a buying club during the Great Depression and opened its first Hyde Park location in 1933. After a series of gradual expansions, the cooperative opened the 55th Street location in 1959, and at the time was the largest supermarket in the city of Chicago.