C&K Market exits from Chapter 11 bankruptcy

By Scott Graves, Pilot staff writer July 04, 2014 05:29 pm

Brookings-based C&K Market, which operates Ray’s Food Place and other grocery stores in Oregon and California, is emerging from bankruptcy protection following a judge’s order this week, the company announced today.

The order, signed by U.S. Bankruptcy Judge Frank Alley, allows the company to operate without court supervision.

The judge’s decision comes more than six months after the company voluntarily filed for Chapter 11 bankruptcy and began closing or selling about a third of its 60 stores and laying off 20 percent of its 2,500-person workforce.

“Entering Chapter 11 was a difficult decision for our family,” said Doug Nidiffer, chairman of the board. “As we prepare to emerge, we know we made the right decision.”

Nidiffer said the leadership skills and vision of newly-hired president Karl Wissmann “will guide this company into a bright future. We look forward to serving local community needs for many years to come.”

Wissmann, who has 40 years of retail food management experience, is joined by new chief financial officer David Doty, who was hired in June.

C&K Market filed for bankruptcy in November 2013 in a Eugene court. As part of filing for Chapter 11, it announced the closing of 16 of its stores, including the Shop Smart in Harbor. 

In October 2013, C&K Market sold off its pharmacies, among them Chetco Pharmacy in Brookings and Pharmacy Express in Harbor.

The Brookings-Harbor Shopping Center in Harbor, formerly owned by C&K, is currently on the auction block, with the deadline for bids on July 15.

Before filing for bankruptcy, the company had shut down stores in many communities, including Smith River and Crescent City. C&K closed the stores citing increased competition from Walmart and other big-box stores in those markets.

However, C&K Market, represented by Portland law firm Tonkon Torp, said its liabilities were between $100 million and $500 million, while its assets ranged between $10 million and $50 million. The company was paying Tonkon Torp nearly $360,000 to navigate it through its reorganization efforts.

There were 8,500 creditors when the company filed for court protection. 

C&K’s largest creditors was THL Credit of Los Angeles and Endeavour Structured Equity & Mezzanine Fund I of Los Angeles, which were owed more than $14.9 million. The top vendor creditor was Supervalu of Hopkins, Missouri, which was owed $5.3 million. C&K owed Western Boxed Meat of Portland $2.3 million and United Salad Co. of Portland $876,000, while former Tarks Market owner Ron Ridgway was owed $593,000.

Among other major creditors were Bigfoot Beverages of Eugene ($414,000), Umpqua Dairy Products ($390,000), VPD IV of Sacramento ($387,000) and J.B. Hunt of Lowell, Arkansas, ($362,000).

Under the plan proposed to the Judge Alley, C&K Market’s largest creditors would become equity partners in the grocery chain.

The plan also will create a board, including present chairman Nidiffer, the son of co-founder Ray Nidiffer; William Kaye, chosen by the creditors’ committee; and three chosen by investment fund lenders Endeavour and THL Credit: Steven R. Wilkins, W. Hunter Stropp and Iain G. Douglas.

“This is a pretty unusual plan for an Oregon company,” said Al Kennedy of Tonkon Torp, C&K Market’s attorney.

All debt will be canceled, Kennedy said. Unsecured creditors with claims of less than $10,000 will receive 80 cents on the dollar, with large creditors receiving stock.

“When you’re dealing with a publicly held company with debt, that’s not unusual,” Kennedy said. “This is a little different because it includes all creditors, including trade creditors (vendors). It cleans up the balance sheet so that when the company comes out of Chapter 11 it will be a viable, strong company.”

There will be restrictions on sale of the stock, Kennedy said. The company’s shares will not be traded on any Securities and Exchange Commission-regulated exchange and will not be registered.

After emerging from bankruptcy, C&K Market has many possibilities, he said.

“Over the next three, four or five years they could do” an initial public offering, he said. “They could merge with another grocery store chain, or could sell the company. That all remains to be seen.”

— The Medford Mail Tribune also contributed to this story.