Stockholders say close the store
PROTECTED CONTENT
If you’re a current subscriber, log in below. If you would like to subscribe, please click the subscribe tab above.
Username and Password Help
Please enter your email and we will send your username and password to you.
In the end, the vote wasn’t close…
After a meeting Saturday, December 14, by a vote of 47,690 shares to 31,407 shares, the share holders of Community Grocers, Inc. (CGI) approved a resolution to “wind up the business… liquidate the properties and reduce the assets…” and dissolve the corporation of the community-owned grocery store.
No time line was established to formally close the store, but the vote allows the CGI board of directors to begin the process in that direction.
Over 70 individuals, a mixture of CGI shareholders and interested community members, attended the meeting that lasted well over two hours. Shareholders unable to attend the meeting submitted their votes by proxy.
Speaking in favor of the dissolution, original shareholder Randy McDonnell summarized a number of factors that have worked against the continued viability of CGI over the past several years.
These factors include the number of stores in and out of town offering groceries; the closing of local businesses, especially in the retail area surrounding CGI; and a loss of population, including the employees of local businesses no longer in operation.
“We cannot save CGI as it was,” he said.
It was noted CGI currently has a debt of $107,000 in comparison with an estimated net worth of $305,000.
“Your corporation is not insolvent,” said Bill Stiles, an attorney from Des Moines who led the meeting. Stiles was the attorney that guided the original board of directors when it formed CGI in the mid-1990s.
It was also estimated, however, the store was losing approximately $10,000 per month and had done so for some time.
Molly Murphy, who identified herself as a non-shareholder, urged shareholders to vote against the resolution to dissolve the CGI corporation.
“I’m here to represent almost 20 people under the age of 45 who’d like to have the time to come together and develop a new business model that allows us to extend this time and not make a decision today,” she said.
Over the past three or four days, Murphy said her group had already considered seven or eight viable opportunities that could help CGI survive. Because of financial concerns, she said she would understand if the board chose to close the CGI doors, but she urged shareholders not to dissolve the company.
She said new sets of eyes could search for ways to cut costs while identifying what goods and services are most desired by the local community. She suggested new shareholders and new board members could help in this endeavor.
Murphy said that the dissolution of the company would send the wrong message to anyone in the community who might want to get involved to save the business.
“We have people here that want to put the effort into it,” she said. “We just need the chance to do it.”
At one point an amendment was brought to the table to postpone any steps toward dissolution for six months, but that motion was later rescinded.
Stiles explained that a vote to dissolve the corporation would not mean the corporation would disappear overnight. He estimated that the actual dissolution might not occur for a couple months or longer. He explained the corporation needed to remain solvent to sell assets, sign paperwork, and settle other details.
CGI board member Kelly Main explained his board’s dilemma.
“We can’t sit there and just continually run the shareholders’ investment in the ground,” he said. “At some point we’ve got to blow the whistle.”
While Main welcomed any effort from the younger generation, he said turning the business around would require three things: people, commitment, and checkbooks.
“If the checkbook doesn’t come on the table, that’s not commitment,” he said. “One way or another, we can’t really stay open too much past the end of the year without an influx of cash.”
