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www.chicagotribune.com/business/chi-wed_jaysdec05,0,1755741.story
Chicago
Tribune
Jays' sale to Snyder's wins court approval
By
Mike Hughlett
Tribune staff reporter
December 5,
2007
A U.S. Bankruptcy Court judge on Tuesday approved
the $24.8 million sale of Jays Foods Inc. to a Pennsylvania
snack food-maker, rejecting a Chicago businessman's
last-minute effort to assemble a rival bid that would keep
Jays' South Side plant open.
The plant, which has
produced Jays potato chips for decades, is slated to close
Wednesday. Jays' buyer, Snyder's of Hanover, will retain the
Jays brands but doesn't intend to run the South Side factory,
jettisoning 220 jobs there.
The future also seems
unclear for 420 Jays employees in Chicago involved in
warehousing, distribution and other work. Snyder's, in a press
release, said it plans to employ 420 Jays workers, but that's
250 fewer than Jays now employs in Chicago, not including the
factory, and another Jays facility in Jeffersonville,
Ind.
Snyder's is acquiring the Indiana plant, which
employs about 250, but not properties in Chicago, which Jays
leased from a real estate firm. Snyder's chief executive, Carl
Lee, declined to comment in detail after leaving the courtroom
Tuesday. However, he said Snyder's "will take great care
to preserve the Jays brand."
Jays filed to
reorganize under Chapter 11 on Oct. 11, its second insolvency
in three years. At the same time it agreed to sell its assets
to Snyder's. Under bankruptcy rules, rival bids could be
submitted. But the bid deadline passed late last week without
any viable offers, Jays said.
Lawyers for Wallace Sims
Jr., a retired Chicago banker, urged Judge Pamela Hollis at
Tuesday's hearing to extend the bidding deadline.
"What
we are trying to do is preserve jobs and keep this company in
Chicago," Gary Grasso, an attorney for Sims, told the
court.
Grasso said two current or former McDonald's
Corp. executives were interested in backing Sims, though he
declined to name them. He also said that upon learning of Jays
impending plant closing, representatives of former Chicago
Bears coach Mike Ditka called him to express interest in
"keeping Jays in Chicago." A Ditka representative
couldn't be reached for comment.
And Grasso noted that
Michelle Harris, a Chicago alderman whose ward includes Jays,
was pledging over $4 million in city tax subsidies to help
Jays if Sims became the new owner. Outside the courtroom,
Harris said the tax-increment-financing money had been
earmarked for improvements at Jays but hadn't been
used.
While it couldn't be used to finance an
acquisition, it could be used by a new owner for plant
improvements. Harris said Jays is one of her ward's largest
employers, and that once shuttered it would be a "white
elephant."
Hollis seemed sympathetic, but she said
bankruptcy rules wouldn't allow her to extend the bid deadline
unless Sims' investor group could guarantee it would cover any
losses if Snyder's backed out. They couldn't.
"As
much as I'd like to assume the position of the mayor of
Chicago and protect jobs, my job is different," Hollis
said. Her job, she went on, was to look out for creditors. "If
Snyder's walks away, this entire thing blows up."
Sims,
in an interview outside the courtroom, said he didn't get
financial information on Jay's until several weeks after he
asked for it.
"We never had a level playing
field," he said.
But Mark Thomas, an attorney for
Jays, said Sims was treated the same as other interested
bidders. Jays' major creditors backed Snyder's bid.
"No
one wanted to see an auction more than us," said Steve
Jakubowski, an attorney for Jays' unsecured creditors. "But
it's important to get the bird in hand."
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