Richfood to purchase 8 Farm Fresh stores $6.75 million sale to benefit creditors of bankrupt grocer

January 05, 1996|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

In the first move to dismantle scandal-ridden Farm Fresh Supermarkets of Maryland Inc., eight of the Baltimore chain's 10 supermarkets will be sold to Richfood Holdings Inc. for $6.75 million, pending court approval, documents show.

The sale is not expected to affect an ongoing investigation by the court-appointed trustee operating Farm Fresh, which was forced into involuntary bankruptcy proceedings last month amid allegations of fraud involving more than $1 million. The FBI also is conducting a "preliminary inquiry" into the matter.

The proceeds will help pay off creditors. "The trustee believes that the sale will result in the highest possible return to creditors of the estate," said Richard M. Goldberg, an attorney for the trustee.

Little, if any, of the proceeds is expected to be left for Farm Fresh's owners, founder Jack Millman and his partner, local wholesaler B. Green & Co.

Even the Farm Fresh name was sold to Richfood, according to a copy of the contract agreement.

Richfood Holdings, the Richmond, Va.-based parent company of giant wholesaler Richfood Inc., will acquire stores at Southview, Mondawmin Mall, Church Square, Walbrook and Greenspring shopping centers; at the Arbutus Shopping Plaza; and on East North Avenue and North Monroe Street.

Richfood, which just weeks ago came through with an 11th-hour line of credit to keep Farm Fresh operating, decided not to buy stores on Hamilton Avenue and Belair Road because they were less profitable, said Stuart Newton, chief financial officer and senior vice president of Richfood Holdings.

The trustee intends to continue operating the two remaining supermarkets until another buyer is found. Other matters remain unresolved.

Mr. Newton declined to comment on the possibility of Richfood selling the Farm Fresh stores to another grocery operator.

Mr. Newton also declined to comment on the fate of Farm Fresh's more than 600 employees.

Buddy Mays, president of Local 27 of the United Food and Commercial Workers union, which represents most Farm Fresh employees, was less reserved. "I'm very concerned about it," he said of the Richfood deal. "First and foremost, we want to protect all the jobs."

A hearing on the proposed sale will be held Jan. 26 in U.S. Bankruptcy Court.

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