The surprise last-minute sale of Koffee Kup Bakery and subsidiary Vermont Bread Company to Flowers Foods — the $4 billion maker of such national brands as Wonder Bread — advanced Tuesday when a judge ruled that undisclosed proceeds could reimburse lenders for $8 million in outstanding loans.
But claims from other creditors — including some 250 laid-off workers owed back pay — will have to wait at least two weeks until lawyers discuss their options before another court hearing on July 6.
“My hope is that those issues resolve themselves by agreement without the necessity of a ruling,” Chittenden Superior Court Judge Samuel Hoar Jr. told a dozen attorneys representing the shuttered company and people seeking payment.
Some 150 Koffee Kup workers in Burlington and 100 Vermont Bread workers in Brattleboro were surprised April 26 to find their manufacturing and distribution plants abruptly closed without explanation, leading the judge to appoint a receiver to sell the assets.
Customers with hopes that Koffee Kup and Vermont Bread would rehire workers and return local baked goods to store shelves were shocked June 7 when the bakeries were sold to the Georgia-based Flowers Foods, which quickly issued a press release saying it has “no immediate plans to reopen” either the Burlington or Brattleboro plants.
A lawyer for Koffee Kup, for its part, filed an emergency motion June 10 seeking the immediate disclosure of sealed information about the deal.
“The Koffee Kup entities cannot engage in meaningful discussions regarding the distribution of any surplus proceeds without first knowing and fully understanding the terms and conditions of the sale,” Burlington lawyer Alexandra Edelman wrote in her motion.
Edelman and her client apparently received the information they wanted, as she told the judge Tuesday “we actually have all been working as collaboratively as possible.”
Koffee Kup’s lawyer said that, although a real estate closing has yet to happen, the sale has advanced enough to allow lawyers to see there will be surplus funds after paying secured creditors KeyBank $7.6 million, the Vermont Economic Development Authority $213,000 and the Continental Indemnity Co. $84,000.
But news about who else could be paid what won’t come until another court hearing July 6.
Workers, for example, have complained that the company paid out accrued vacation and sick time into their accounts after closing, only to have it electronically retracted from their accounts because of a disagreement about who’s responsible for covering such obligations.
Vermont Attorney General TJ Donovan filed court papers May 19 supporting an emergency call for employees to be reimbursed nearly $800,000.
“That issue is still unfolding and not resolved,” Assistant Attorney General Justin Kolber told the judge Tuesday. “Until that happens, we think our interest would justify our involvement.”
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