WAKEFERN: BIG V IS JUST LOOKING FOR A TAKEOVER

MARTIN SCHNEIDER

TRENTON, N.J. -- Wakefern Food Corp. charged that Big V Supermarkets wants to withdraw from its contract with the Elizabeth, N.J.-based membership cooperative simply to facilitate a quick sale of the 32-store chain, as lawyers for the two companies presented closing arguments last week in U.S. Bankruptcy Court here.

Judge Raymond T. Lyons concluded the trial and said he would have a verdict in the case as soon as possible, but declined to specify a date.

Judge Lyons will determine the terms under which the Florida, N.Y.-based retailer can withdraw from Wakefern. If Big V is able and willing to meet those terms, it is likely to pursue a new supply agreement with another distributor -- most likely with C&S Wholesale Grocers, Brattleboro, Vt. -- while proceeding with its financial reorganization, observers said.

C&S could not be reached for comment.

If Big V gets an adverse ruling, it could explore other supply options, including remaining a member of Wakefern, as it develops its reorganization plan.

Big V filed for Chapter 11 protection late last year and had originally hoped to complete its financial reorganization by June. But matters became complicated when Wakefern filed suit against C&S, charging the wholesaler with interfering with and undermining Big V's relationship with Wakefern -- prompting Big V to sue Wakefern to determine its rights and obligations as it terminates its contract.

Dennis Block, Wakefern's counsel, told the court in his summation that Big V could not function without the ongoing loans it receives from Wakefern. "It's clear that Big V could not operate as a C&S customer on its own. Big V obviously plans to sell as soon as it withdraws."

Big V replied that Wakefern's membership bylaws obligate the cooperative to allow the retailer to exit its supply contract without paying the $200 million withdrawal fee that Wakefern is demanding.

"Throughout the case, there has been no sound reasoning offered by Wakefern about why the bylaws of the shareholder agreement are not binding," Stephen Greiner, Big V's counsel, said in his summation.

Greiner also denied that Big V was looking to withdraw from its contract to facilitate a takeover. "Big V will continue to operate its business and all assets will be maintained," he said.