Letter To The Heads Of GE Capital And Penn Traffic

Letter

Schumer To Penn Traffic And GE Capital: Slow Down Penn Traffic Bidding Process; Don't Rush Into A Decision In Friday's Court Date That Doesn't Maximize Number Of Jobs Retained And Stores Open

There Have Been Reports That Penn Traffic Is Pushing For A Bankruptcy Court To Agree, This Friday, to Low-Ball Liquidation Bid That Will Shutter Stores and Toss Workers Out

Schumer Sends Letter To Penn Traffic and Their Main Creditor, GE Capital, Strongly Opposing the Liquidation Bid and Urging All Parties to Adhere to January 22nd Deadline to Submit Bids That Will Keep the Most Jobs and Stores

Schumer: The More Time We Have The More Stores And Jobs Can Be Saved

Today U.S. Senator Charles E Schumer sent a letter to the heads of GE Capital and Penn Traffic asking them to slow the process down and not accept a liquidation bid for Penn Traffic that would shutter many stores and lead to significant job loss. Reports indicate that that Penn Traffic is pushing for a decision to be made by this Friday -- well ahead of the previously established court date for bids of January 22 -- to allow the stores to be sold at an auction. A rush to decision this Friday, that prioritizes a liquidation bid, would likely result in a large portion of the stores being liquidated. Schumer today urged the major players in the Penn Traffic negotiations to not accept any low-ball liquidation bids offered by this Friday, and instead to prioritize bids that maximize the greatest number of jobs retained and stores kept open. Schumer strongly urged all interested parties to utilize the full time available -- to January 22nd -- to submit going concern bids.

"There is no reason for Penn Traffic or GE Capital or the bankruptcy judge to rush into a decision this Friday if that decision means accepting a low-ball liquidation bid that shutters stores and tosses out workers. I am urging all parties to cool it and to work together to choose a bid that maximizes the greatest number of stores kept open and workers kept on the job," said Senator Schumer. "That is why I am strongly urging all parties concerned, including the creditors and the company, not to rush the process so that the most comprehensive bid can be selected. If we stick to the timeline available-- and the major creditor says they are willing to wait -- then there is enough time for a bid that keeps the maximum number of jobs and stores. To rush this quickly and ruin the lives of thousands of people and scores of communities would be unconscionable. Since there is significant interest, beyond the liquidator bid, it would make no sense to rush this process."

Schumer has been a strong advocate for employees and customers of supermarkets owned by Penn Traffic. He successfully secured an additional month for companies to bid on Penn Traffic locations to allow the company to sell as many stores as possible. The senator was concerned that the possibility of liquidation -- and the immediate shuttering of store doors at scores of locations, and workers tossed out at Christmas time -- loomed as an all-too-real possibility for upstate workers and consumers. Previously, the deadline to submit bids had been December 21st. However, two weeks ago GE confirmed that the deadline to submit bids would be extended to January 20th or 21st with the goal of having a deal wrapped up by January 31st.

Now Schumer is expressing his concern regarding reports that Penn Traffic is rushing to have the bankruptcy court approve a court supervised auction -- a possibility that is likely to lead to the liquidation of many stores.

A full copy of his letter is below.

Mr. Young and Mr. Neal:

I write to express my deep concern at recent reports that Penn Traffic is rushing to complete the sale process in bankruptcy court (by this Friday) in a way that would result in acceptance of a low-ball liquidation bid that could well shutter scores of stores and lead to significant job loss for Penn Traffic's 4,000 current employees. This is unnecessary and counter-productive for workers and consumers, especially given the facts that the main creditor, GE Capital, and the Court have agreed that bidders should have until January 21 to submit bids, and the fact that there are viable going concern bids well in the works.

The bottom line is that, in the interests of consumers, workers and the people of New York, it is urgent that interested parties forge a deal that maximizes the numbers of workers retained and stores kept open. I see no reason why the financial needs of the parties cannot be met while achieving this goal. Penn Traffic has over 4,000 current employees, over 18,000 retirees, and the citizens across this state, many in communities with few or no other food shopping options, rely on Penn Traffic's grocery stores to feed their families.

I have personally spoken to creditors to secure enough time so that bids will be submitted that will keep stores open, operating, and employing New York State residents, and allowing citizens to have local access to quality groceries. When Penn Traffic neared liquidation after declaring bankruptcy several months ago, I asked GE Capital to extend their loan in order to help Penn Traffic find a potential bidder. In good faith, and in good sense, GE Capital agreed with this move. Now that this has happened, it would be a travesty for a liquidation bidder to fill that gap.

I urge each of you to refrain from taking any steps that will prioritize a liquidation bidder over a going concern bidder only because it means capital committed a few days earlier. Through struggling economic times, the workers and customers of your stores have been loyal and supportive. Please extend your support to them by allowing enough time to ensure a result that preserves grocery stores and protects jobs.

Sincerely,

Charles E. Schumer
United States Senator

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