CHIPPEWA FALLS, Wis. — A Chippewa County judge on Friday approved the sale of Gordy’s Market stores in La Crosse, Arcadia and Galesville to grocery supplier Nash Finch, rebuffing an attempt by grocer Quillin’s Quality Foods to buy the stores.
Quillin’s bid of $450,000 fell short of the $550,000 by Nash Finch. Quillin’s claimed it previously made an agreement with the stores’ landlord, Hegenbarth Investments LLC, to assign the lease to Quillin’s.
“It’s our position that the rules of the auction were not followed, and, if they had been followed, our bid would have been successful,” said attorney David Russell, representing Quillin’s. He said the chain did its homework before the auction, which took place Sept. 25, and that the landlord of the property of the three stores would not allow anyone else to bid.
“The rules were set. They were established. They were not followed,” Russell said.
Attorney Michael Polsky, appointed receiver for Gordy’s Market, argued the auction rules were changed to allow someone not approved by the landlord to buy the stores.
“That was the result of Quillin’s misconduct,” Polsky said of the rules change.
He claimed at the auction Quillin’s indicated that no one else would be acceptable to Hagenbarth Investments LLC and that there would be no reason for anyone else to bid.
“I’m not in the business of selling groceries,” Judge James Isaacson said. But he said it would seem to him that if one of the bidders suggested the landlord would accept only one bidder, that bids for the stores would be stifled.
Winning bidder Nash Finch is suing Gordy’s Market, seeking $86 million, while Settler’s Bank of Madison is seeking $4.9 million. Gordy’s puts the amount it owes Nash Finch at $44,154,136, plus what it calls liquidated damages, costs and attorney fees.
Polsky was appointed as a receiver under a method spelled out in what’s called Wisconsin Chapter 128, a voluntary debt consolidation plan.
Quillin’s began with a single store in La Crosse in 1949 with founders Ed and Greta Quillin. Later, it added locations in Minnesota and Iowa.
The sale of a Neillsville store was not taken up by the court Friday.
Polsky said six other Gordy’s stores will be auctioned off later this year. Those stores are in downtown Chippewa Falls, Lake Wissota, Cornell, Ladysmith, Barron and Chetek. Isaacson will hold a hearing on the sale of those stores at 1:30 p.m. Monday, Dec. 11.
Sold on Sept. 28 were Gordy’s locations in Black River Falls, Osseo, Augusta, Whitehall, Shell Lake, Spencer and Rice Lake, and two closed stores in Eau Claire, and one each in Hayward and Chippewa Commons.