GARDINER — One year ago, Associated Grocers of Maine was in severe financial straits and placed into receivership at the request of one of two banks holding mortgages on the property.
A receiver began to dismantle the 57-year-old grocery co-op, which owed $6 million to the Bank of Maine and $4.8 million to Camden National Bank, among other debts.
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All 141 employees of Associated Grocers of Maine lost their jobs, the products went in a fire sale, and the vacant plant at 47 AG Drive in Gardiner was auctioned off.
Some of the workers found new jobs, the grocers found new suppliers and the warehouse is now part of Pine State Trading Co.
The cooperative’s shuttering began in earnest in late April 2011, when a judge appointed a receiver to wind up the business because of its unpaid debt.
Today, all that remains of Associated Grocers of Maine are the memories and what appears to shaping up as series of lengthy legal battles. There was a brief failed attempt at gaining bankruptcy protection in August and much of the story is laid bare there.
Meanwhile, the effects of the co-op’s collapse continue to be felt on former employees and some former co-op members.
Workers move on
Timothy Grotton, of South China, spent 35 years at Associated Grocers of Maine, putting the state tax stamps on the back of cigarette packs on the first shift for the past 18 years.
“I loved my job. I worked by myself in the mezzanine, all enclosed,” said Grotton, who does not smoke. “I knew what had to be done and I did it. I ran a lot of cigarettes through that machine. I used to complain about it.”
Today, Grotton is unemployed and can’t believe he ever complained about working there.
Other former employees of Associated Grocers of Maine are in the same boat — unable to find permanent jobs to replace what they had.
“I certainly miss my job and the guys I worked with,” Grotton said. Most of them were there at least 20 years, he said.
Grotton was one of the last workers to leave the warehouse building in the AG Business Park in Gardiner. He worked until June 10.
Grotton is convinced that his age — 57 — works against him in the job hunt. He updated his skills by completing an 80-hour course offered by the state on resume-writing, interviewing and basic computing.
“I’ve applied basically for state jobs, but I keep getting rejected,” he said. “The thing is, I need the insurance.”
He paid $1,300 a month through COBRA — the federal law that allows workers who lose their health benefits to continue getting insurance through their group health plan — from June to December. That took up all his unemployment money.
No interviews resulted from more than two dozen job applications, so he took partial retirement in February, a move that gave him an opportunity to get insurance for less through the Teamsters Union.
Grotton said he collects $842 a month, but the insurance is $800.
“It’s a no-win. You just can’t win,” he said. “I sat down with my wife and we talked. I figure that it’s worth six to eight bucks an hour. It was a really good policy.”
That decision, however, limits his ability to work. It can’t be in a warehouse or truck driving job, and it can’t top 30 hours a week.
He still spends two hours a day searching the Internet for jobs.
Documents in U.S. Bankruptcy Court for the District of Maine show that Grotton was owed $25,503 in severance, accrued vacation, holiday and sick time from AG. While the Teamsters Union is still pursuing claims for severance and vacation against his former employer, he said the prospect of getting any money looks unlikely because the receiver in the bankruptcy has said there will be no money for unsecured claims like that of the Teamsters.
After Associated Grocers of Maine shut down, Gene Couture, 60, of West Gardiner, spent three months looking for work before taking a job in Freeport that paid less than what he received on unemployment.
At the Associated Grocers of Maine plant, he ran the yard, fueled equipment and occasionally filled in as a driver.
“I had to change my outlook on what I wanted to do,” Couture said. “I went into a custodial job. I thought it was better to take a pay cut to get some experience.”
Three months of experience as a custodian in Freeport helped him land a job as a state custodian in Augusta, a job that he enjoys. He works Tuesday through Saturday, 6 a.m.-2:30 p.m., and looks forward to late afternoons of golf.
His salary is about a third less than what he brought home from Associated Grocers, and he gets health insurance from the state, paying an additional $300 a month for his wife’s coverage.
“I feel extremely lucky,” he said.
Thomas A. Roberts lives in Gardiner about a mile from the former headquarters of Associated Grocers of Maine.
He started with the company right out of high school and over 38 years made his way up to buyer, spending most of the last 10 years at the warehouse.
Roberts and his wife were in Las Vegas celebrating their 35th wedding anniversary when their son called with the news about the cooperative closing.
When his job with Associated Grocers of Maine ended, he started helping Associated Grocers of New England — another cooperative that’s not affiliated with Associated Grocers of Maine — because it had taken on some of his former employer’s stores.
Then he was offered a job with Dejarnett Sales, which produces the Surefine label, and he continues to work with Associated Grocers of New England stores.
Roberts got two weeks of unemployment benefits before getting his job. His new salary was roughly equivalent to his former earnings and he also was given a car.
Now, instead of one-mile commute, he drives all over the state, from Aroostook County to Kittery.
“It’s not a bad thing,” he said. “I know most of the stores, and a lot of them knew me, so it’s been pretty easy.”
Michael Bourgoine, chief executive officer of Associated Grocers of New England, based in Pembroke, N.H., said that firm hired eight former employees of Associated Grocers of Maine, mostly in sales and transportation, and it now supplies many stores formerly supplied by Associated Grocers of Maine.
“We now have brought on 101 former Associated Grocers of Maine customers since the failure of Associated Grocers of Maine and the closing of Associated Grocers of Maine,” Bourgoine said recently.
Grocers change gears
Shelley Doak, executive director of Maine Grocers Association, said no independent grocery stores closed because of the Associated Grocers of Maine collapse.
“I think it’s a testament to the independent grocer in Maine and to their place in the market and their offerings,” she said. “They’re the community anchor, rural, independent store. They’re in our small communities. It’s a testament to the customer service that they provide and the customer loyalty.”
She said the individual store owners and operators worked with wholesale companies and vendors to keep supplies coming and maintain their market share.
Rob Pleau, co-owner of Pleau’s Market in Winslow, said his customers saw little effect from the demise of Associated Grocers of Maine.
He quickly picked up Associated Grocers of New England as a supplier.
“It was a seamless transition,” he said. “Both were Surefine for private label. The tags changed a little bit and there was a little more variety. Some prices dropped, because AG of Maine had gone up in price. It would have been better if AG of Maine could have remained in business and people still worked there, but it is what it is.”
Pleau said he could have made the switch on his own earlier.
“I would have saved money and gotten access to more products,” he said. “But Associated Grocers of Maine was a Maine company. It would be cutting the throat of people who live and work right in our town.”
Pleau’s Market is now among the 32 businesses and their owners being sued by the receiver. The complaint says Pleau’s Market owes $22,588 plus fees and interest for products supplied by Associated Grocers of Maine.
It also notes that Pleau’s Market had more than double that amount — $50,000 — on deposit at the grocery co-op.
However, Fred Bopp, the attorney for receiver James Ebbert, said the capital deposit money was on paper only and not in a separate account. Like everything else at AG of Maine, it’s gone. But some grocers have said that those deposits — accumulated over time by grocers that paid premiums to AG of Maine on vendor bills and purchased stock — should cover their outstanding bills.
That money battle now will take place in court, where Pleau’s Market and its owners are represented by attorney Joseph Goodman, of Portland. Goodman represents some 60 grocers.
Also among the defendants are Fuller’s Market Inc., of West Gardiner, and Walter and Pamela Longfellow. The lawsuit seeks an attachment or a lien on the property for $46,508. It also notes the defendants had $50,000 in a capital deposit at Associated Grocers of Maine.
Walter Longfellow said he is aware of the lawsuit and that he is represented by a separate attorney.
Kevin Joseph, owner of Joseph’s Market in Waterville, had to scramble to find an alternate supplier when Associated Grocers of Maine closed.
“Thankfully most of my volume is done in meat,” Joseph said. “I have a couple other suppliers I was able to buy my meat from.”
Now, he deals with Associated Grocers of New England.
“With AG of Maine, we had to buy a class A share of stock that cost us $2,550, and two class B stocks at $2,500 each; and we had to keep a capital deposit of three times our weekly purchases. In my particular case, my factor was $30,000 to protect AG if I went out of business.”
His arrangement with Associated Grocers of New England is different. “They add on an extra 1 percent to every invoice to build a capital deposit,” Joseph said.
Now, he’s been told he owes Associated Grocers of Maine $14,110, plus other costs and interest.
A mountain of lawsuits
There are now 32 civil lawsuits filed against grocery stores that were former co-op members, and each lawsuit is accompanied by a $150 filing fee and a request to transfer the case to the Business and Consumer Court docket, which is managed out of Cumberland County.
Bopp said receiver Ebbert’s position is that the grocers owe the money for products they received.
He said there is no money in either capital accounts or excess capital accounts to set off against that debt. He said those amounts were recorded by Associated Grocers of Maine, but not kept in any separate accounts.
At three meetings recently across the state, Ebbert told the grocers he was willing to allow 20 percent of the amounts listed in capital accounts and 35 percent of the amounts in excess capital accounts to offset the amount owed.
As many as a dozen grocers opted for that settlement, Bopp said.
“There are somewhere between 160-170 remaining account debtors, folks who owe accounts receivable,” Bopp said. “The sad reality remains the same as it was when the receiver took charge approximately a year ago. It does not look like there will be any funds available for unsecured claims.”
Topping the unsecured claims listed in the bankruptcy filing is $5.3 million in withdrawal liability to New England Teamsters & Trucking Industry Pension Fund. That claim is listed as disputed.
Most of the former employees are listed among those holding unsecured priority claims for severance, vacation, holiday and sick pay.
Any money collected now is likely to go to The Bank of Maine once the receiver’s bill and legal bills are settled.
Betty Adams — 621-5631
badams@centralmaine.com
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