Co-op Atlantic goes into bankruptcy protection

Co-op Atlantic is laying off 400 employees and closing four of its food stores in the region as it moves ahead with a restructuring plan that includes getting out of the food and retail gas businesses.

The company issued a statement Thursday that also said it has obtained an order from New Brunswick's Court of Queen's Bench to initiate proceedings under the Companies' Creditors Arrangement Act.

The company, which recently sold its gas and grocery business to Sobeys, said the order protecting the organization from creditors will give it the time it needs to deal with its financial challenges.

Bryan Inglis, the company's interim chief executive officer, said the layoffs are the result of reduced operations in the food and retail gas divisions.

As for the closures, they include grocery stores in Moncton, N.B., Labrador City, N.L., Grand Bay-Westfield, N.B., and Charlottetown.

Most of the layoffs will be made in New Brunswick, where 290 people will lose their jobs at the two affected stores, the company's head office in Moncton and a warehouse in the same city.

The remainder of the layoffs include 50 in Labrador, 36 at a distribution warehouse in Sydney, N.S., and 23 at the store in P.E.I.

Co-op Atlantic announced it was getting out of the food and retail gas businesses in April, a move that was approved by its member-owners May 12.

Meanwhile, KPMG Inc. has been appointed by the court as the monitor for the restructuring, but the co-op will remain responsible for the day-to-day management.

As well, the company said it is working on securing additional financing with National Bank and pledged to keep paying suppliers for goods and services bought during the CCAA proceedings.

As part of the restructuring, the co-op recently sold the majority of its assets in its wholesale and retail food and gas businesses to Sobeys Capital Inc.

Sobeys has already announced plans to convert some corporate Co-op stores to Sobeys' banners. Locations in Quispamsis and Sackville, New Brunswick, Milford, Nova Scotia and Charlottetown, P.E.I. are being converted into Foodland stores, while a North Rustico, P.E.I. store is becoming a Clover Farm.

As well, four corporate Co-op gas bars are being converted to Shell stations and one is becoming a Fast Fuel.

In addition, Sobeys is now supplying food to all but two of 48 member-owned Co-op locations and is close to finalizing long-term supply or franchise agreements with them. Stores in Gander and Clarenville, Newfoundland opted to go with another supplier.