FOR IMMEDIATE RELEASE: December 21, 2009
SCHUMER: GE CAPITAL WILL KEEP PENN TRAFFIC OPEN AND OPERATING THROUGH END OF JANUARY, AS FIRM SEEKS TO SELL STORES AND KEEP WORKERS ON THE JOB
GE Capital Made Their Decision Last Night; Late Last Week, Schumer Requested that GE Give Penn Traffic More Time to Lock Down Bidders that Will Keep the Most Stores Open - And Avoid Liquidation and Thousands of Lost Jobs
Action Avoids Liquidation And Loss of Stores in Areas with Few Shopping Options and Jobs
Schumer: GE Capital Agreed it was in Everyone's Best Interest to Extend Deadline
Today U.S. Senator Charles E. Schumer announced that GE Capital has agreed to pursue a schedule for bids that corresponds to Schumer’s request to keep Penn Traffic open and operating through the end of January. Schumer called GE Capital CEO Mr. Neal last week 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 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 today. However, late last night 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.
Schumer said this action preserves the best opportunity to preserve shopping options for upstate consumers, many in areas with precious few choices, while also potentially preserving the maximum number of jobs in an economy with already sky-high unemployment. Previous to this commitment, there were indications that GE Capital was considering liquidating the stores, which would likely have led to 6,000 layoffs right around Christmas. Bids have emerged for Penn Traffic owned stores across New York, and this will give the company more time to work out the details of those bids to ensure the maximum number of stores are kept open.
“This welcome decision by GE Capital to extend the deadline for bids means thousands of New York workers can breathe a little easier through the Christmas season as Penn Traffic identifies 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 means 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’m very thankful that Mr. Neal and GE Capital has agreed that more time is better for both GE Capital and for Penn Traffic.”
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. GE Capital’s decision to puruse a path that parallels Schumer’s request will give Penn Traffic more time to execute a transaction that will potentially keep numerous stores open while saving thousands of jobs—a transaction that may not have been possible to execute without the additional time granted.
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—they want to liquidate all of Penn Traffic’s stores on December 30th. All 6,000 employees will be fired under this scenario. In addition to the job loss, closing of supermarkets would devastate many communities that have only a single grocery store.