The grocer, which operates L&L Food Centers grocery stores, Atlas Drugs pharmacies, Annette's 1/2 Off Cards and Gifts and Levandowski's Sausage Co., has been placed in receivership by Ingham County Circuit Court Judge Rosemarie Aquilina at the behest of Flint's Citizens Bank.
With Aquilina's order, Birmingham-based Amherst Partners LLC, a financial adviser that specializes in turnarounds and restructuring, took over the company Tuesday. L&L officials said many of its operations will be shuttered, though some of its five remaining grocery stores will remain open. That means many of the company's nearly 300 employees will lose their jobs. The company abruptly shut down three of its stores late last month.
L&L will close the four Atlas pharmacies it operates inside its Haslett, Okemos, Holt and Lansing stores by the end of the week. Officials pledged to work with customers to transfer their prescriptions.
Meanwhile, Lansing card shop Annette's will close its doors once it sells out its current inventory. The sausage company, which operates a plant in Lansing that procured Levandowski meats for the L&L stores, also will shut down, though no firm date has been set.
That will leave L&L mainly with its grocery stores, which are supplied by Grand Rapids-based Spartan Stores Inc. But L&L officials said more closings are likely even though Amherst will continue to look for a buyer.
Uncertain situation
Efforts will be made to keep the company running and minimize job losses but the court-appointed receiver guaranteed nothing.
"If a buyer is found, the buyer or buyers would most likely need staff. But for now, this situation is uncertain," said Sheldon Stone, who also is an Amherst partner.
Stone said Thursday two entities he declined to name are interested in buying L&L. He plans to meet with one of the prospective buyers today.
"We're hoping that we'll be able to sell all or part of the company and preserve jobs and allow a company that's almost 80 years old to continue in some fashion," Stone said.
As receiver, Stone oversees operations at L&L and has the authority to keep it running or liquidate it. Stone said he has been working with L&L since September to come up with a turnaround plan but acknowledged "we got there a little too late."
L&L was forced into receivership after the 79-year-old Lansing company defaulted on three $1 million loans it had through Citizens Bank, also known as Citizens Republic Bancorp. According to court documents, the grocery chain told the bank Nov. 19 it was burning through $800,000 in expenses each week but only generating $700,000 in sales.
Citizens claims L&L owes the bank $2.47 million on its loans. The bank said in its court filing the grocer also owed $2 million to vendors and suppliers, including the Lansing State Journal, $1.2 million in past-due real estate leases and property taxes and $200,000 in payroll and payroll taxes.
Dire financial straits
Stone said receivership will work better for L&L because it removed a temporary restraining order barring L&L from spending any money. The company now can order goods again, restocking stores with Christmas hams and other merchandise.
But the move still is an indicator of a business in dire financial straits. For those who have been running L&L - President Stan Levandowski, his sister, Stephanie Birmingham and General Manager Rick Zahn - receivership is not uplifting.
"Given that the average lifespan of business today is 13 years, nearly 80 years in business is quite an accomplishment," Levandowski said in a statement. "L&L has been my families' life's work. The company as we know it will be deeply missed."
"Having to tell staff they may no longer have jobs is most difficult," Birmingham said in a statement. "We do care deeply about our associates and all their work on behalf of the company."
Thursday's developments were part of an ongoing retrenchment by the regional grocer.
On Nov. 26, it abruptly closed its L&L stores on West Saginaw Highway in Lansing Township and 1601 W. Mount Hope Ave. in Lansing, along with a Mor For Less store at 16795 S US Highway 27 in Lansing.
L&L officials said little at the time about the closings and did not respond to repeated questions for comment on the status of the company and its workers.
But in its two-page statement Thursday, L&L blamed the sudden closings on Citizens Bank, which loaned the grocery chain $3 million in 2001. L&L said Citizens forced the closures.
Levandowski, grandson of the company's founder, said a combination of competition, a poor state economy and tight credit led to the company's slide into receivership.
"My family and I, along with our management team, were optimistic that the economy would turn around and banks would start lending again so that we could reinvest in the stores and continue to update our facilities. This, however, has not come to pass."
No comments:
Post a Comment