WILLIAMSVILLE, NY - Is Tops really going into bankruptcy? Over the weekend, Bloomberg reported that it could happen in the coming weeks. If that's the case, what could it mean for shoppers and employees?
Attorney Raymond Fink of Lippes, Matthias, Wexler, and Friedman says, "They get to reshuffle the deck."
Niagara University Marketing Professor Paul Richardson makes another key point about a very competitive business. "The average margins in the grocery industry are only around one percent...tiny margins."
Chapter 11 bankruptcy protection with debt restructuring could keep the doors open, so Tops doesn't stop. Fink says some distributors may hold off on deliveries but most Tops suppliers will stay connected. Some vendors are even protected themselves by law, as creditors.
And for others, "Some kind of financing package and based upon their projections, that would enable them to continue to pay for goods as they bring them in."
Looking ahead, "If they file I think the average consumer won't necessarily notice any real difference. I'm not sure the employees will notice any real difference on day one."
However, Fink says there's an additional bankruptcy benefit for a retail business in that it can use such a filing to get out of costly leases or sell non profitable locations. That's counter to Tops neighborhood local focus in some more remote areas.
He adds, "I think in the immediate Western New York area, that won't be an impact because there is so much competition. But if you're in a rural community - and Tops does have a presence in more rural communities - there could be a hardship."
Bankruptcy can also allow a business, after negotiations, to potentially modify some labor agreements.
That's why the United Food and Commercial Workers Union representing 12,000 Tops employees, some of them part time, is keeping a close eye on this situation with pension, 401K and other concerns.
There has been no comment from Tops officials.