Deal with Co-op Atlantic creditors 'very, very close'

Lawyers representing Co-op Atlantic creditors appear close to an agreement on distribution ofthe company's assets.

In a court hearing Thursday lawyer Rob Chadwick, who represents the company in the credit arrangements case, told New Brunswick Justice Darrell Stephenson he believes a deal is "very, very close."

"We have asked counsel to put their pens down in terms of litigation," said Chadwick.

A creditor agreement would avert a potentially costly series of court actions that would further damage the pensions of 1,200Co-op employees and retirees.

Co-op Atlantic filed for creditor protection last year.

Its employee pension plan was underfunded at the time by $31 million according to documents filed by bankruptcy monitor KPMG.

"There was a lot of people getting close to the pension," said Carl Flanagan of the United Food and Commercial Workers union, which represents 135 former Co-op workers. "The pension is the major issue for us now."

Flanagan says 107 people in the local lost their jobs when the Co-op warehouse in Moncton was shut down.

"If they're trying to work out an agreement on the monies from the sale, that can only be a good thing for us," said Flanagan.

The pension is the major issue for us now.- Carl Flanagan, UFCW

Justice Stephenson also signed an order authorizing the sale of Co-op's former store property on Central Street in Summerside, PEI.

Proceeds will go to the mortgage holder, Business Development Bank of Canada.

Last year, as part of arestructuring, Co-op sold most of its retail food business to Sobeys Capital.

Four grocery stores were closed with the loss of 400 jobs.

The layoffs did not affect jobs at the 49 Co-op member stores across the region.

Those stores employ 2,200 people and most of them now use Sobeys as their wholesaler.