Paul Bass Photo
Webster Bank has sent over 300 notices to potential bidders on the assets of the failing Elm City Market cooperative grocery.
That word comes from Jeff Klaus, regional president of Webster, which got the green light last week to conduct an auction of the grocery’s assets under Article 9 of the Uniform Commercial Code. (Read about that and about the broader story here.) The 2,200-member coop, which opened in November 2011 on the ground floor of the 360 State St. residential tower, defaulted on a $3.6 million federally guaranteed loan from Webster Bank. It also owes over $500,000 to its landlord.
Klaus (at left in photo with bank Vice-President Scott Smith, with whom he has worked on the market plan) said the bank sent the notices to food-related companies in the area like Stop & Shop and Shop Rite that would have a conceivable interest in the market.
The auction will take place at the beginning of October, he said. Interested bidders are asked first to submit an application along with a 20 percent refundable downpayment. Webster said the bank will prescreen the applicants based on their qualifications.
One of the expected bidders is a group backed by local philanthropist L. Linfield Simon, who said he hopes to lend money to a new company owned by the market’s current managers to take over the market with the help of a new CEO. Simon said Friday he will withhold further comment until after the auction.
Klaus said Simon’s group has worked out an agreement with the landlord, Multi-Employer Pension Trust (MEPT), to rent the space and keep it going as a market. MEPT did not respond to a call for comment by the time this story was published.
The co-op board is not looking to find an entity to bid on the assets, according to member Diane Polan. “Although there may be individual members who are planning to do that, the board is not doing it.”
Webster and MEPT should support the NCGA plan that allows the coop to stay in existence. The NCGA plan and the $1 million of new working capital and improved management allows all vendors as well as Webster and MEPT to be paid back in full and permits the largest community owned business in the region to survive and prosper.
Lin Simon's Foundation should invest Lin's money to create new businesses and grow existing ones, not undermine one that is the pride of the city.
If Lin Simon already has a lease agreement, this auction seems contrived to let him buy an entire $10 million business for just the cost of used equipment. If Webster and MEPT can't find a way to support our coop, why aren't they auctioning both the equipment together and the lease. That way we might see a Trader Joes move into town. This business, which has $10 million in annual sales, is worth much more than value of its used equipment. More questions need to be asked.