CINCINNATI -- Clifton Market is roughly $6 million in debt and losing approximately $30,000 a month, shareholders of the community cooperative were told at a three-hour meeting to consider future options.
Local bankruptcy attorney Eric Goering laid out three options for the neighborhood owners who packed the Masonic Lodge at 218 Ludlow last night. Most of those in attendance shelled out $200 apiece to bring the Ludlow Avenue grocery store to life in January 2017.
Goering said the store could close, forcing its lenders to pursue a foreclosure sale to recover some of the outstanding debt. It could stay open with temporary funding from existing shareholders and seek a debt restructuring. Or, it could pursue a sale of the building and other assets to Clifton restaurant owner Churmukh Singh. Goering said the owner of Elephant Walk restaurant has offered $1.8 million, but the deal would require cooperation from lenders.
Shareholders will be voting through Thursday to decide which of the three options they’d like to pursue. But Goering said the size of the debt and the store’s lack of profit might make closure inevitable.
“When you analyze a business the overriding question you have to answer is what is there to save? If you’re bleeding $30,000 a month I think the answer is clear,” he said. “I’m just concerned how this market can operate profitably, especially with the competition in the market.”
In an email to shareholders in advance of last night’s meeting, the Clifton Market Board said it signed a 45-day management agreement with Singh on Nov. 15 in hopes of keeping the store open long enough to restructure. Here’s an excerpt from the email:
“The new Board has been working diligently over the last 5 months to explore any and all viable options that would allow the Market to continue to exist and ultimately thrive as a co-op despite our dire financial situation. At this point, none have been found. As a result, we have also explored options that would allow the market to exist as a privately owned entity and have had discussions with Mr. Singh regarding an asset purchase agreement.”
Goering said Clifton Market has $3.1 million in secured debt, meaning lenders could recover some losses by forcing a sale at foreclosure auction. The biggest lender, National Cooperative Bank, is owed $1.8 million on its first mortgage. Shared Capital Cooperative holds a second mortgage of $951,000. Goering estimates the value of the building and assets at $2.6 million.
Because the foreclosure process would start with Sheriff's Office appraisal of a vacant store followed by an auction at which bids begin at 75 percent of the appraised value, it's possible that a forced sale would bring far less than $1.8 million. So, it might be in the bank's best interest to pursue Singh's offer, Goering said. Those most unlikely to recover debts include wholesale supplier Laurel Grocery Co. and individual shareholders who invested more than the $200 minimum to keep Clifton Market afloat.