A bankruptcy protection case filed on behalf of Associated Grocers of Maine has been thrown out, and documents show the defunct distributor is unable to repay hundreds of creditors, including former employees.

U.S. Bankruptcy Court District of Maine Chief Judge Louis H. Kornreich ordered the dismissal Monday, ruling that the receiver who oversaw the dismantling of the cooperative lacked the authority to file a bankruptcy petition on its behalf.

The 298-page initial bankruptcy filing shows Associated Grocers of Maine has almost $6.6 million in assets but $23.5 million in liabilities. Those liabilities include $6.7 million owed to creditors with secured claims. Creditors with secured claims are considered for repayment first.

Beyond these creditors, the prospect of receiving anything from the liquidation of Associated Grocers appears minimal, according to attorneys involved in the case.

“The prospect of payment to anyone other than secured creditors in the case is unlikely,” said Fred Bopp, the attorney for the receiver.

Unpaid liabilities include money due for unused vacation time and severance for Associated Grocers of Maine’s more than 100 former employees.

The largest chunk of this debt is $5.3 million for the New England Teamsters & Trucking Industry Pension Fund of Burlington, Mass.

“It’s actually the unfunded liability that they had in the fund,” said Daniel Walsh, business agent of Teamsters Local 340 in Portland, which represents 70 Associated Grocers of Maine employees. “When a company goes bankrupt, the employees are still entitled to their pension.”

Walsh said employees received letters about the bankruptcy filing, and several attended an initial hearing in the case two weeks ago in federal court in Bangor.

“Naturally, they’re concerned and frustrated,” Walsh said. “It does look like there is not going to be enough to go around. They had almost $100,000 in vacation and lost wages along with the pension fund. The men and women that toiled every day to keep it going for more than 50 years are out in the cold.”

Walsh said he and the Teamsters’ attorney planned to look at all avenues to try to secure those monies.

“We are certainly going to go after anything and everything they are legally entitled to,” Walsh said.

“Absent some argument they could make, it does not look like there is any money to pay them,” Bopp said.

Dismissal of the bankruptcy case means other civil cases involving the closing of the former grocers’ cooperative can proceed.

That includes two lawsuits in state court: one by Savings Bank of Maine, now Bank of Maine, which initiated the closing; the other, in which Associated Grocers of Maine sued a retailer seeking money for goods.

Joseph Goodman, an attorney for 52 Associated Grocers of Maine member stores, had objected to the bankruptcy filing, claiming the receiver lacked the legal authority to file for bankruptcy.

He said the matter now goes back to state court.

“The receiver is free to continue to collect the accounts receivable in accounts owed,” Goodman said.

He said the grocers had $1.5 million deposits with Associated Grocers of Maine while owing $800,000 in accounts receivable.

Goodman said he believes his clients — mostly owners of small, independent grocery stores — have a better chance of getting their recoupment claims in state court.

“I thought it should have stayed in state court so my clients could have a seat at the table,” he said.

The bankruptcy filing details the public unraveling of the 58-year-old cooperative, which had provisioned some 300 independent grocers in Maine, New Hampshire, Vermont and Massachusetts.

Legal proceedings began when Bank of Maine went to state court April 27 seeking appointment of a receiver empowered to close the business after Associated Grocers of Maine defaulted on its $6 million mortgage.

That mortgage was secured by personal property, which apparently included AG’s accounts receivable. Camden National Bank also held a $4.8 million mortgage the 120 acres of real estate, including the distribution warehouse and other buildings in Gardiner.

Camden National Bank has recently sold that property to Pine State Trading Co., which plans to use it to warehouse supplies for convenience stores.

Betty Adams — 621-5631

badams@centralmaine.com

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