JOLIET – Central Grocers has notified workers that it plans to shut down its Joliet operations, putting nearly 550 people out of work by mid-July.
The notice was given before the Joliet-based company filed for bankruptcy Thursday.
Central Grocers has been trying to find a buyer for the warehouse, but none has emerged, President and CEO Ken Nemeth stated in a notice to employees.
He said Central Grocers now plans to sell the Joliet facility at auction.
"At present, no potential buyer has stepped forward who intends to operate the facility on an ongoing basis as a distribution center," Nemeth stated in the letter, which was obtained by The Herald-News. "Therefore, we do not expect that any potential purchaser will be making offers of employment to the employees employed at the property."
The notice was given under the Illinois Worker Adjustment and Retraining Notification Act, which requires companies to give employees advanced notice of large layoffs.
"We expect all of the operations will be wound down in the next 6-8 weeks," Nemeth stated in the notice.
He said the company expects employees to be terminated between June 26 and July 10.
Workers outside the warehouse Thursday said they were not surprised by the announcement that the facility would be closed, although one said he was not convinced yet that it would happen.
"They've been saying that for a month," said the worker, who declined to give his name. "I don't know what's going to happen."
Two others, however, said the warehouse was shutting down.
A news release from the company and the bankruptcy filing describe operations at the warehouse as winding down before it is sold. According to the bankruptcy filing, the company has already started liquidating inventory at the warehouse.
Central Grocers is primarily a grocery wholesaler that has been in business since 1917 and distributes its own brand of products under the Centrella label.
The company moved its corporate headquarters to Joliet in 2009, along with opening the 920,000-square-foot distribution center to supply what was then a growing business in the Chicago area and northwest Indiana.
The Joliet facility employs 549 people, including just under 400 Teamsters, according to Nemeth's letter.
Teamsters Local 703 did not immediately return calls for comment.
A company spokesman declined to comment on the WARN notice.
Central Grocers filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Delaware, claiming total assets of $262 million and liabilities of $232 million.
The filing came after a group of suppliers that included Coca-Cola and General Mills went to court Tuesday with a petition seeking to force the company into Chapter 7 bankruptcy to collect on claims totalling more than $1.8 million.
In addition to its wholesale operations, Central Grocers owns the Strack & Van Til supermarket chain. The company said it will continue with the plan announced last month to sell 22 of those stores.
"We are using this court-supervised process to provide us the time and flexibility to conduct an orderly sale of the Strack & Van Til stores while we work to sell the warehouse in Joliet and wind down our wholesale distribution operations," Nemeth stated in the news release.
The company also is closing nine Ultra Foods stores, including the location in Joliet.
Central Grocers laid off 29 workers at the Joliet warehouse April 21, and, according to one source, laid off another 10 on Friday.
The company has been seeking a buyer since December, according to a court declaration from Donald Harer, chief restructuring officer for Central Grocers, filed with the bankruptcy petition.
Central Grocers received several bids for certain assets, including the distribution center, according to Harer's declaration.
Central Grocers operates as a co-op and is owned by member stores. Tony's Finer Foods and Berkot's Super Foods, which have stores in Joliet and Will County, are two of the larger members.
Certified Warehouse Foods, which closed its two stores in Joliet in April, also was a member.
Certified owner Ken Clymer said Central Grocers' inability last year to pay the usual annual rebate to member stores contributed to his business closing. He now is concerned that the stock that he and other members have in Central Grocers will be worthless.
"I heard they're going under," Clymer said, "and it's not good for any of the members."