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Sale will keep Tippin's plant producing
pies
By
DAN MARGOLIES The Kansas City Star
A federal bankruptcy judge on Friday approved the sale of the
Tippin's pie plant in Kansas City, Kan., to Four B Corp. for
$1.48 million.
The purchase, which is expected to close Monday, will salvage
all 100 jobs at the plant.
Tippin's on Thursday closed its four remaining Tippin's
restaurants in the Kansas City area and its Gambucci's
restaurant in Olathe after suffering mounting losses and running out of cash.
About 350 salaried and hourly workers lost their jobs.
The pie plant provides pies and pie ingredients to area
supermarkets, including about 20 Hen House and Price Chopper stores owned by
Four B.
Four B is owned by members of the Fred Ball family. The company,
which owns the 30,000-square-foot pie plant building and leases it to
Tippin's, will acquire the plant's equipment, leasehold improvements,
inventory and intangibles, including the Tippin's trade name.
Four B is a member of Associated Wholesale Grocers Inc., a
retailer-owned food cooperative. More than half the pie plant's sales are to
Associated Wholesale Grocers, which distributes the products to its
customers.
After offsets for rent, real estate taxes and food ingredients
it bought through Four B, the sale is expected to generate about $1.2
million, all of which will go to the principal lender for Tippin's, Valley
View State Bank. Unsecured creditors are not expected to receive any money
from the sale.
Tippin's owes Valley View more than $4 million. About half that
consists of a $2 million line of credit that Tippin's had nearly drawn down.
Chief U.S. Bankruptcy Judge Jerry Venters
found that the purchase price was “fair and reasonable” and was the “highest
and best price” received by Tippin's. Four B was the sole bidder for the
plant's assets.
Tippin's filed for Chapter 11 protection in January 2003 and,
until a few weeks ago, hoped to emerge as a smaller but profitable operation
consisting of its restaurants, the pie plant and a food manufacturing
facility in Kansas City.
But in testimony Friday at a hearing on the pie plant's sale,
James Kerwin, Tippin's president and chief
executive, said business declined dramatically in recent months.
“The final straw was this low-carb
diet craze,” testified Kerwin, who called it
“devastating” to the bakery business. The restaurants' specialties were pies
and cheesecake, products high in carbohydrates.
Kerwin said that a party he did not identify
expressed interest three weeks ago in buying the Lenexa Tippin's and Olathe Gambucci's locations, but he said Valley View turned down
a request by Tippin's to use half the proceeds from the proposed sale for its
operations.
“The bank said they couldn't do that,” he said. “We concluded we
wouldn't be able to continue and were probably facing liquidation.”
Kerwin said Four B had pledged to keep the
plant's employees and “to keep the operation the same.”
“I think this is really a win-win situation for the (bankruptcy)
estate and for the Balls and Four B Corp.,” Kerwin
said. “And I'm especially pleased for the 100 employees, many of whom have
been with us for years.”
Kerwin was the principal founder of Tippin's
25 years ago, building it into an 18-store operation in four states before
declining sales prompted it to sell most of the restaurants. Kerwin said he will offer consulting advice to Four B but
will not become an employee of the company.
To reach Dan Margolies,
call (816) 234-4481 or send
e-mail to dmargolies@kcstar.com.
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