FOR IMMEDIATE RELEASE: December 18, 2009
IN PERSONAL PHONE CALL, SCHUMER URGES GE CAPITAL CEO TO KEEP PENN TRAFFIC OPEN AND OPERATING THROUGH END OF JANUARY AS FIRM SEEKS TO SELL STORES AND KEEP WORKERS ON THE JOB
In Personal Call, Schumer urges GE Capital CEO to Give Penn Traffic More Time to Find Bidder that Will Keep The Most Stores Open - And Avoid Liquidation and Thousands of Lost Jobs
Action Would Avoid Liquidation And Loss of Both Jobs and Stores in Areas with Few Shopping Options
Today U.S. Senator Charles E. Schumer announced that he has, in a personal phone call, urged GE Capital CEO, Michael Neal, to keep Penn Traffic open and operating through the end of January. Schumer called Mr. Neal to request flexibility on credit terms to allow the extra time the company needs to sell as many stores as possible to bidders that would keep them operating as going concerns. The possibility of complete liquidation – and the immediate shuttering of store doors at scores of locations, and workers tossed out at Christmas time – looms an all-too-real possibility for upstate workers and consumers.
Allowing Penn Traffic to operate through the end of January provides the best opportunity to preserve shopping options for upstate consumers, many in areas with precious few choices, while also potentially saving the maximum number of jobs in an economy with already sky-high unemployment. There are indications that GE Capital is considering liquidating the stores, which would likely lead to 6,000 layoffs right around Christmas. Bids have been offered for some, but not all of the grocery stores. Schumer said that giving Penn Traffic more time to solicit bids for their other stores, as well lock down the bids that have already been solicited, is critical.
“This decision would allow thousands of New York workers to breathe a little easier through the Christmas season as Penn Traffic works to identify a buyer that will keep open the maximum number of stores. This is very good news for both workers at these stores and for upstate consumers, who deserve good choices and food shopping options,” said Senator Schumer. “It would mean more time to find a bidder that will keep more stores open, potentially saving thousands of jobs. We should be doing everything possible to preserve businesses and jobs in this economic climate, and I urged Mr. Neal and GE Capital to grant this extra time.”
Schumer contended that, compared to the going pending concern bids, liquidation would not have returned the highest amount of GE Capital’s loan. However, in many bankruptcy proceedings, the certainty of a liquidation transaction makes it attractive to creditors, as it limits the risk that a given deal will not close. In this instance, GE Capital has been planning on giving Penn Traffic until the first week of January to lockdown a bidder. Were that deadline to stay as is, a transaction that could save thousands of jobs may not be possible to execute. Were Mr. Neal to agree to Schumer’s request, it would give Penn Traffic more time to execute such an important transaction.
Penn Traffic operates stores in a number of rural locations where they are the only provider of groceries. Many communities would face commutes of an hour or more to find grocery stores without Penn Traffic. Penn Traffic has 76 stores, 53 of which are in NYS. They have 6,000 employees, roughly 4,000 are in NYS. The head of the lending group is GE Capital— the goal is to have Penn Traffic’s stores sold by the beginning of January, be it to a liquidator or to a company that will keep the stores open. Were liquidation to occur 6,000 employees could be fired. In addition to the job loss, closing of supermarkets would devastate many communities that have only a single grocery store.