A bankruptcy judge in Santa Ana has tentatively approved the $2.3-million sale of the Irvine Ranch Farmers Market store at the Beverly Center in Los Angeles, lawyers involved in the case said Monday.
The sale is one of the final steps to wrapping up the bankruptcy proceedings for what once was a trend-setting upscale grocery chain.
The Beverly Center store was bought by Chalet Ventures, a company headed by Daniel Bobroff, owner of Chalet Gourmet, a Hollywood gourmet grocery store. In the Irvine Ranch chain, which once consisted of 11 Southland stores, the Beverly Center market was the only one that consistently could cover its own expenses, according to records filed in bankruptcy court.
A group headed by Bobroff several months ago bought the Irvine Ranch store in Woodland Hills, the only other outlet in the chain to remain in business under the original name. Bobroff will continue to operate the stores at the Beverly Center and in Woodland Hills under the Irvine Ranch Farmers Market name, an investment banker close to the deal said Monday.
Founded in 1968 by Jon Hubbard, the Costa Mesa-based Irvine Ranch chain made a name throughout Southern California with its fancy produce and fresh meats. By early last year, the chain had expanded to 11 markets scattered from Northridge to San Diego.
But in July, 1988, the chain was forced to file for federal bankruptcy court protection from its creditors. Documents filed in the case then listed liabilities of $17.5 million owed to more than 200 creditors, including vendors, lessors and institutional lenders.
Attorneys involved in the case have blamed the chain's rapid expansion, extremely high rents and adverse publicity for its demise. At the same time, Irvine Ranch faced tough competition from other chains for affluent shoppers' grocery dollars.
"You can walk into Vons or Albertsons these days and see the same polished apples . . . in 10 different varieties and displayed the same way" as at Irvine Ranch, said attorney William Lobel, whose firm represented the chain in the bankruptcy.
Bobroff's investment group entered the picture late last year, when Tribu Inc., the parent of Chalet Gourmet, bought Irvine Ranch's stock and took control of the ailing chain.
At the time, the group intended to operate the entire Irvine Ranch chain, Bobroff said Monday in a prepared statement.
But after four months, "our analysis indicated that even with a substantial additional cash and effort infusion, the stores would never be profitable," Bobroff said Monday. He cited increased competition, occupancy costs and the markets' locations and sizes as reasons why the chain would never prosper.
The Bobroff group began selling off assets or, in some cases, returning the sites to the landlords. Today, every store except the Beverly Center and Woodland Hills outlets have been closed or sold to other grocers.
Still Not Final
U.S. Bankruptcy Judge John Ryan approved the sale of the Beverly Center store to Chalet Ventures several weeks ago, when no other buyers surfaced.
Judge Ryan still must sign his order approving the sale. Case attorneys also must submit a distribution plan, which will have to be approved by the court. After that, secured creditors should receive payment within 60 days, said Roger Ferree, attorney for Kroger Co., the largest unsecured creditor, which is owed about $2 million and holds another $2 million in equity in the Irvine Ranch chain.
The proceeds from the sale of the Beverly Center store will be used to pay some secured creditors and administrative claims against the Irvine Ranch chain. The secured claims total at least $2,219,850, said Ron Rus, attorney for the unsecured creditors. Unsecured creditors, who are owed about $17.5 million, will receive nothing, Rus said.
"The fact of the matter is, there were never any assets. The apparent assets were illusive," Rus said Monday. "It just wasn't a viable entity."