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Hyde Park Co-op Markets' story, impact on the neighborhood, struggle to survive, and demise

A neighborhood news and analysis service of Hyde Park-Kenwood Community Conference and its website www.hydepark.org. Help support our work: Join the Conference! This page does not come from or represent the views of the Hyde Park Cooperative Society.

From the Co-Op's final letter to the public and vendor/creditors.

The Hyde Park Cooperative Society, Inc., by a majority vote of its Members and affirmation by the Board of Directors, will return its store to the Landlord and vacate the premises on or before January 31, 2008. the action was taken due to the mounting debt from the closed 47th Street store and the lack of outside financing to allow us to continue operations.

The last day of shopping will be January 20, 2008 and after t hat date no retail sales ill occur. As part of the transaction, The University of Chicago wil contribute funds together with the existing assets of the Coop which will provide the basis to retire most of its obligations to the secured and unsecured creditors. The amount of final payments to creditors is anticipated to be finalized with a target date of payment scheduled for March 2008....

After 75 years, we are sad to close this chapter in the life of the Coop, but want to thank everyone during these years that supported our endeavors.

Latest

The University has signed Treasure Island. Here is the University January 15 2008 release on this and interim options for shoppers. In mid February Treasure Island was fixing up corrections required by the Board of Health and awaiting permits.


From: Hank Webber [mailto:communityaffairs@uchicago.edu]
Sent: Tuesday, January 15, 2008 4:05 PM
To: grocery-store-announcement@bulkmail.uchicago.edu
Subject: Hyde Park Grocery Shopping Announcement

Dear University Community,

I am pleased to tell you that the University has signed a lease with
Treasure Island to open a grocery store in the Hyde Park Shopping Center
at 55th Street and Lake Park. Treasure Island is working intensively to
obtain a number of city business licenses that are required. Although
the timing of this process is somewhat uncertain, Treasure Island has
set a goal of opening the new store before the end of February.

Treasure Island, a locally owned grocer (see www.tifoods.com
<http://www.tifoods.com/> ), plans to make major renovations to both the
interior and exterior of the store, while maintaining operations
throughout the remodeling. It will be some months before the
renovations are completed, but we believe they will be worth the wait.

Treasure Island will occupy the space formerly leased by the Hyde Park
Co-op. Given the Co-op's serious financial difficulties, the University
worked closely with the Co-op Board to ensure the smoothest possible
transition to a new store. The Co-op's licensing agreement for the 55th
Street store will expire at the end of January, and the Co-op
anticipates closing its operations by January 20 as its current food
supplies are sold.

All of the current Hyde Park Co-op employees who are interested in
working at the new store will be invited to interview for employment,
beginning as early as this week. Additionally, the University has
worked with Alderman Toni Preckwinkle to ensure that city and state
resources, support, information and training are made available to the
Co-op employees.

Beginning immediately, Treasure Island is offering on-line shopping and
delivery service to the Hyde Park community. For information, visit
www.tifoods.com <http://www.tifoods.com/> and click on the "personal
shopper" link. Treasure Island has also agreed to immediately take over
the Co-op's shopping and delivery program to the area shut-ins, ensuring
continuous service to those who cannot do their own shopping.

In addition to the news about Treasure Island, we are looking forward to
the opening by the end of January of the new Hyde Park Produce in
Kimbark Plaza at 1226 E. 53rd Street. The new store will be more than
three times larger than the current store at 1312 E. 53rd Street,
providing a significantly larger selection of produce, meats, cheeses,
and other foods.

Since we are in a period of transition, we want to remind you of other
Hyde Park grocery shopping locations near the University, including:

* Harper Foods, 1455 E. 57th Street, 773-363-6251
* University Market, 1323 E. 57th Street, 773-363-0070
* Village Foods, 1521 E. Hyde Park Blvd. (Village Center),
773-288-8180
* Market in the Park (Regents Park), 5050 S. Lake Shore Drive,
773-734-3687

A detailed map with shopping alternatives can be found on the web at
http://oca.uchicago.edu/ More information about shopping options is
available through the Hyde Park Chamber of Commerce at
contact@hydeparkchamberchicago.org or 773-288-0124.

Sincerely,

Henry S. Webber

Vice President, Community and Government Affairs

December 14, 9 pm. The Co-Op vote is over, and so is the Co-op. The vote was Option A 3,200, Option B 2049, together about a quarter of the membership. Judge Jay Mulberry says the vote under Project LEAP was a model of integrity and good judgment, although many voted incorrectly and were disqualified. Complaints were voiced by the Herald, others about the wording of the ballot, with allegations denied by others that a UC affiliated pr firm wrote the letter.

Then , the board convened to give about 70 shareholders, residents and employees a chance have input on the board's decision (perhaps in reality to vent, as the result was foregone). Afterwards, the board voted in public 7-1 for Option A and ultimate dissolution, with the store to close January 20 (not 28). Hope Mueller was the sole dissenter; Member Bob Stanek was absent.

Most in the crowd at that December board meeting consisted of supporters of Option B or some alterative that might save the 75 year old institution. They were highly critical of what they considered a bullying, inconsiderate and shortsighted role and campaign by the University of Chicago as well as irked at past decisions of Co-Op boards and were highly skeptical that a Treasure Island or Dominicks' would be better. Board members James Poueymirou, James Withrow and Mike Lowenthal pointed out the fiscal constraints of an insolvent institution that cannot get debtor-in-possession or a commercial loan, even with offers of help as large as Bruce Sagan's $500,000. Many participants appeared to be be trying last minute scenarios when there was simply no more time--especially after the University, which had bailed out the Co-Op twice before, flatly refused to agree to any payment plan or delay beyond that evening. ) Some, seeing the inevitable, pressed the University to commit to bringing in a store superior to the chains' run-of-the-mill and keep it that way. Sadness or bitterness was voiced for the plight of the 170 employees who have sacrificed for the store over the years and were only offered a chance to interview with, at request of the University and Alderman. The Herald reports that a class action suit is being prepared.

Visit the Co-Op's and Evergreen's website and our Co-Op page. Our page includes report on the November 18 meeting and full background and official statements of the 2 options and later reports, opinion, possibilities.The Conference hopes the community will come together now to work for the common good and neighborliness.

Several who have been putting out background and questions on the Co-op crisis (our thanks to all) are Jay Mulberry, M.L. Rantala and James Withrow. To inquire about getting on their blog or list serve, email respectively jaymulberry@gmail.com (Save the Co-op-- in Google Groups) (Good Neighbors@googlegroups.com) , mlrantala@mac.com or jamesdwithrow@mac.com (Hyde Park Urbanist-http://www.alwaysintransit.notepad.com/Hyde_Park_Urbanist/). Also Curtis Black's news blog. There is also a site of a retail improvement advocacy group that on this issue urges a vote for Option A: www.hungry4change.org (or call 773 324-8614, may now be same as hydeparkmajority.blogspot.com/) . See also the blog Hyde Park Progress- hydeparkprogress.blogspot.com. Caveat emptor, of course--and see comments about from, inter alia, Evergreen. More on the internet war in From the President's desk, below.

Herald chronicles final days

January 23, 2008

After 75 years, the Hyde Park Co-Op, the oldest urban grocery cooperative in the country, closed its doors Sunday, sent off with a New Orleans-style funeral complete with jazz musicians and speeches by supporters of the cooperative. Hundreds attended the event.

Meanwhile, the head of Treasure Island Foods, the grocer slated to replace the Co-Op at 1526 E. 55th St. in the Hyde Park Shopping Center, having sighed a 20-year lease fo the space last week, vowed to hire as many former Co-Op employees as possible.

"We want to give them the opportunity to work for Treasure Island," said Maria Kamberos who with her husband Christ runs the 45-year-old grocery store chain. Kamberos also said the employees would be making good salaries. "They will get paid at least what they're getting paid," Kamberos said.

While Kamberos would not predict an opening date, saying "as soon as we get permits and licensing" they would open, University of Chicago (U. of C.) Vice President for Community and Governmental Affairs Hank Webber predicted the store would open by th end of February, shuttling earlier predictions of a two-week turnaround time between the Co-Op's closure and the replacement grocer's opening.

Treasure Island will also continue the Co-Op's popular shut-in shoppers program, Kamberos said. Both Kamberos and Webber flatly rejected rumors that courtyard activities, including the annual garden fair, used book sale and Circle Pines tree sale, were curtailed or eliminated in the agreement. "It turns out those are not tenant issues," said webber, who described Treasure Island as "a very good combination of strong grocer and a specialty store." "It was that combination that was very attractive," Webber said.

Among the well-wishers at Sunday's event was former alderman Leon Despres, a founding member and longtime supporter of the Co-Op who said the cooperative had served as a demonstration that cooperative business model could work effectively.

Citing massive debt and a onerous lease at its shuttered 47th street location, the board of the HydePark Cooperative Society voted last month to fold the cooperative grocer following a tumultuous referendum on the proposal. U. of C. had offered to pay much of the Co-Op's debt in exchange for store closure.

U. of C. is additionally planning a facelift for the spot and Kamberos said Treasure Island will be making interior changes as well. New features of the store will include a sushi bar, a juice bar, organic and non-organic salad bars and a Belgian chocolate case.

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There appears to be disagreement over whether many of the Co-Op employees are being hired by Treasure Island.

Nominations called for, as Nominations Chair Jay Mulberry says Society (and website) continues. (President Poueymirou also says such an election is necessary.)

Although the Co-Op market is going out of business on January 20, the Hyde Park Cooperative Society remains in existence.

According to our by-laws, an election for members of the Board and Nominating Committee will be held later this year.

At stake are positions for 3 Board members, two Alternate Board members, and 5 members of the Nominating Committee.

During the next two months, the Nominating Committee will interview members who wish to be considered for any of those positions. It will then nominate those it considers most promising.

Members who wish to run for a position on the Board or Nominating Committee but do not wish to work through the Nominating Committee, or are not recommended by the Nominating Committee, can do so by presenting petitions to the Nominating Committee.

To run any position mentioned above, write to nominate@coopmarkets.com or respond to this email.

For descriptions of the duties involved see http://coopmarkets.com/by-laws.htm

Jay Mulberry
Chair, Nominating Committee
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Herald report on the board meeting, December 19, 2007.

Bent on closing a deal guaranteed to shut the doors of the Hyde Park Co-Op for good, the Board of Directors of the Hyde Park Cooperative Society pressed through three hours of leas and exhortations at its monthly board meeting Monday, only to buck the heated crowd and vote [seven] to one to end the 75-year-old cooperative institution's life.

Not even the last-minute offer of a half-million-dollar loan by HydePark businessman and Herald owner Bruce Sagan would persuade the board, led by Board president Jim Poueymirou, to explore a $3.4 million loan offer by the National Cooperative Bank (NCB) [actually a term sheet]. The board, Poueymirou said, had stopped looking at alternatives.

Sagan expressed deep disappointment a the news. "54 years ago the manager of the Hyde Park Co-Op knocked on my door to ask me, a young newspaper reporter working downtown, if I would like to try to save the failing neighborhood newspaper, the Hyde Park Herald," Sagan said. "He promised that he would help support that effort to revitalize the community's newspaper. And he did. Monday I tried to return the favor."

For more than three hours, more than 70 members, including employees, urged the board to explore the loan option before making a final decision. Nominating committee head Jay Mulberry said ignoring the offer from Sagan was a criminal act of neglect. "Bruce Sagan is offering $500,000, but he has 100,000 friends who have another $500,000. With an offer like that, something can really be done. You simply can't pass "Option A" when you have an offer like that before you. It would be a crime," said Jay Mulberry.

Asked by an employee whether there were any possible loans to the Co-Op still available, Poueymirou said the board had asked NCB for a $3.4 million loan and received a preliminary description of the terms of the loan, which included agreements with the university and Certified similar to those described in "Option A," as well as $1 million in monies secured elsewhere. Poueymirou said the deal would take weeks to work out. At a late point in th meeting, Poueymirou said the board had requested an extension from the university of their Monday-night deadline, after which the university would rescind their offer to buy out the Co-Op's $1.2 million debt to the university in back rent for the 55th Street location. The university, he said, refused the request.

Poueymirou pointed to the results of a recently held referendum, in which more than 60 percent of the respndents-3,100 votes or roughly one in every 12 members- backed "Option A," described on the ballot as a "debt work out" and negotiated in private by the board with the University of Chicago and Certified Grocers over several months.

Many members at the standing-room-only board meeting complained that members had not had time to respond and were taken by surprise by a well-financed public relations campaign funded by the university and including phone banks, direct mailings and a glossy, full-color brochure urging member-owners who are "Hungry 4 Change" to vote for "Option A." fliers were also distributed by hired individuals on the street of Hyde Park - including on the steps of the Co-Op, 1526 E. 55th St.

Jay Mulberry said that his campaign to gather support for "Option B," described in a letter accompanying the ballot as Chapter 11 Bankruptcy but essentially a vote to explore any feasible option that would preserve the Co-Op, consisted of a website, a mailing list and an e-mail list of close to 200 people. He said it was incomparable to the money and efforts made by the university.

Hardest hit were the employees, who wil now have to seek employment elsewhere this winter. "It seems like one board opens the coffin, and ten the other board puts the nails in," said an unidentified Co-Op employee. "The personal feeling is the board has just slapped all 174 employees in the face."

He said employees took money from their salaries to buy shares, and also gave up vacation time and sick days. The employees were given letters stating their last day of employment would be Jan. 28.

While the board's efforts were in part driven by a desire to close this chapter in the grocery cooperative's history, it is unlikely to be the final one. A source told the Herald Monday that a class action lawsuit is being prepared in response to the planned shuttering of the cooperative.

__________________

The Herald editorial said the options were not stated properly and did not deal with exploring a third option. Marylou Stauffer Hadditt who now lives in California, sid the Co-op has been the conscience of Hyde Park and must remain. Jonathan E. Cowperthwait said there was no viable option, it was mismanaged and would so remain, and why should the University keep foregoing its rent, and the market brings down prices through size and scale.

The Herald of December 5 reported a new option, which may or may not have been viable, or possible in light of the vote. The Herald says Board President Poueymirou told them that although all the loan options for debtor-in-possession (Option B) are out of play, a $3.2 m. commercial loan (preferred by Nat'l Coop Bank overt the pitfalls of Chapter 11) could come through. Conditions are: Certified accepts buyout for $ million as per option A and the university agrees to a payment plan for the owed rent of $1.2 million (unclear--the plan may in fact include paying the University immediately to avoid foreclosure on the 17th) -both iffy but not out of the question--getting enough for Certified to get them to back off and not fall back on having an agreement with the University and Co-Op already, is the key. This variant does not bankruptcy.
Meanwhile the amount received in pledges passed $35,000 December 6 and a wild campaign, full of accusations of dirty tricks, is underway. Stay tuned.

A substantial number of Hyde Parkers met to discuss options December 4 at the Neighborhood Club, convened by Jay Mulberry. Present and addressing included Board President Jim Poueymirou, members James Withrow and Lisa Chin, GM Bruce Brandfon, UC Real VP for Real Estate Jo Reizner, and former manager and board member Richard Orlikoff. Almost all present and speakers (except Jim P and Jo Reizner) were strongly for Option B or an alternative and asked hard questions of the possible commercial loan form Nat'l Coop Bank and were highly critical of the University and its alleged pressure campaign. President JP ticked up what the Co-Op owes and indicated the possible loan is not enough to cover obligations and indicated that the board would only consider a firm program at least equal in value to that of the University (over 4 million). It was indicated later that the board would seriously pursue the new commercial loan option. It was made clear that fiduciary duty when in insolvency, as now, is to pay creditors.

 

Co-op is insolvent, says President Poueymirou; Board calls Nov. 18 meeting, 3-week vote (ending Dec. 12) on bankruptcy and other options. In "A" (supported by board majority) U of C could forgive, pay much and facilitate new store and Co-op gone. "B" (part of the board) involves a tricky refinance and owner-in-possession bankruptcy closure but reopening under the Co-Op.
One loan was rejected as of Nov. 29, but other options remain. Persons supporting Option B have told this page that persons favoring option B may want to wait for more developments--but remember the ballot must be postmarked by December 12. For links to ballot details and comments see next few paragraphs and added links above.
Note that the December Evergreen contains, with or without board sanction, strong criticism of or comments from several parties in the dispute as well s information on the ballot and content of the two Options.

Here: background and links, Pre-Nov. 18 analysis, November 18 meeting reports incl. Herald,
Co-Op Board statements of how the ballot works. University statement. November 26 board meeting. General Manager's letter and additional to Evergreen. James Withrow's letter tells much not told elsewhere. Other Post-November 18 views. Read the Evergreen or go to its website http://www.coopmarkets/evergreen for its reports on the November 18 Town Hall meeting and the November 26 board meeting.

Ballots went out November 21 and are due by December 12. All members of record get a ballot-- if members have any doubt whether the Co-op has their right addresses, they should go to the membership desk. Follow ballot instructions exactly. See the Co-Op's formal letter to members (never mind who rote it and whether protested and still up with an update section as of December 2) in the coopmarkets.com website or below. To read the Evergreen's statements and interpretations of the 2 options: http://www.coopmarkets.com/evergreen/December2007/JustTheFacts.pdf and http://www.coopmarkets.com/evergreen.htm (Note that the later is a strong critique of actions and positions of the University.) In addition, view the whole latest Evergreen online. at http://www.coopmarkets.com/evergreen/.

View the Co-op Market website (Especially the Evergreen subsite) regularly.
(We are told by a board member who supports option B that the drop dead for loan hopes is December 14 or 15, by which time we will may also know results and whether the "pledge drive" brings forth anything significant $26,000 as of Dec. 2).

Coopmarkets.com as of early December has an addendum to its official letter saying that the National Cooperative Bank has rejected a loan to the Co-Op and there is no other possibility. November 29, board member James Withrow in his blog said there are two other banks in consideration.

At the November 26 board meeting (2.45 hours public, before executive session) a great many questions on both details and major issues were asked by the audience of 20 or so. There were many concerns about the ballots and imperfect addresses.
Joe Reizner of the University disclosed that the contenders for the space are Treasure Island and Dominick's (the former eliciting questions) and saying the University's objective is a good store, not who runs it, and that it's more a community and retail survival problem than one for either the society or the University. (Negotiations were said by all to have been cordial.) Option A disappears, Reizner said, if it is voted down by the members, whether or not the Board supports it (--this was the University position from early November but this was only known to board negotiators with UC until the time of the Nov. 18 meeting); but there is wide feeling that the University and community interest coincide in avoiding a ruinous and prolonged liquidation. If B is voted and fails, Chapter 7 bankruptcy and liquidation follow. Reizner pointed out that the University has listened to concerns for employees and negotiated for them to be able to interview, and wages and benefits will likely be better than at present (where there have been no raises in 6 years) although nonunion (a point raised against the University). The new store would invest about $5 million into the store. Negotiations between the board and the University went on for months, we were told, but only entered present stage when it became evident in September that leasing 47th was impossible, with Certified continually and repeatedly adding conditions and terms.

The board proponents of both Options sought to be as clear as possible, with limited success. It was clear that a loan was not yet secured for Option B to go forward, but the door was still open at National Cooperative Bank - but not for a $400,000 letter of credit needed to secure a new vendor. The pledges would have to be very large to impress a banker. ) The Co-Op was preparing to put up a detailed, ongoing FAQ sheet both in the store and in the Co-Op Markets website.

Read the University statement.

Board president and a 6 of 9 majority, and the University support the debt restructuring (workout) and handover to new entity; Certified is making it hard, seems to prefer Workout with full bankruptcy 2nd choice. Short term shut down likely under any scenario. To our report on November 18 members meeting.

Please note that at least one board member in a public email said that the first paragraph of the following Herald article is untrue in its entirety; board president Poueymirou also said as much at the November 18 meeting.

Hyde Park Herald, November 14, 2007. By Yvette Presberry

Deciding not to pursue a commercial loan to pay its multi-million dollar debts, the Hyde Park Cooperative Society board voted last Saturday to support getting a debt workout with landlords of the 55th Street Co-Op store and the 47th Street Co-op building.

Board president James Poueymirou said the board is endorsing a debt workout that will enable the University of Chicago (U. of C.), owner of the Hyde Park Shopping Center which houses the cooperative's 55th Street location, to forgive up to $1 million of the Co-Op's debts, and also for Certified Midwest Grocers, owner of the 47th Street Co-Op's location at 1300 E. 47th St., to take over the building's lease.

The 55th Street store would operate under the Co-Op's management for about 60 to 90 days, then switch to a new entity. "The Co-Op entity would longer exist," said Poueymirou said.

The Co-Op board president said the U. of C. likes the idea of the debt workout but Certified, which is also the Co-Op's main supplier, disagrees. "They're making terms of a workout very difficult," Poueymirou said of Certified. "We're still hopeful an agreement will be forthcoming."

If both landlords of the properties do not agree, Poueymirou said the next step would be for the Co-op to file for bankruptcy. Attempts to reach Certified were unsuccessful. Hank Webber, vice president of community and government affairs for the university, said he considered the debt workout "a positive move."

The board will present the proposed debt workout, as well as choices for bankruptcy or obtaining a commercial loan, to shareholders at 2 p.m. Sunday, Nov. 18, during a town hall meeting at the Hyde Park Neighborhood Club, 5480 S. Kenwood Ave. The board encourages al of the Co-Op Market's member-owners to attend the meeting. Ballots with the proposals listed wil be mailed to the shareholders on Monday, Nov. 10, so shareholders are encouraged to update their mailing addresses with the Co-Op at the 55th Street Co-Op, 1526 E. 55th St.

"This is ultimately the deciding vote of this venerable institution," Poueymirou said....

Herald editorial of November 14 2007 said the board should not move until it has identified and made public, with transparency, the successor entity--with public discussion to follow including on what the neighborhood expects of such an anchoring institution. The board's responsibility includes providing for the community's future. Above all, we cannot shutter without a smooth transition to a known entity, with proof that a plan is in place. (readers view in letter in this issue range from "good riddance" to sadness to move to 47th.)

 

Co-op considers bankruptcy, U of C to forgive $1.2 million in rent if store closes. Chicago Maroon, November 9, 2007. By Aviva Rosman

Facing financial turmoil, the Hyde Park Cooperative Society, which operates the only supermarket currently open in the U of C's neighborhood, will present a series of options to shareholders later this month that could result in a declaration of bankruptcy and the closure of the 55th Street location.

According to James Poueymirou, president of the Hyde Park Co-op's board of directors, the board is currently weighing three options to present to shareholders. The first option is a commercial loan from an outside lender that would lead to the continued operation of the store.

The second possibility is a debt workout involving the landlords of the 55th and 47th Street locations and all of the co-op's vendors, which would likely result in closure, Poueymirou said.

The third possibility is bankruptcy--either a reorganization of the store would allow it to remain open, or debtor-in-possession financing would result in closure. In this last case, known as bankruptcy liquidation, a third party provides funds for repayment of obligations.

"There are two options that would keep the store open and two that would keep it closed," Poueymirou said. "The truth is that the store is insolvent and has been insolvent for some time."

In order to move the process forward, Co-op Markets will host a town hall meeting on November 18 in the Hyde Park Neighborhood Club to discuss the options. Ballots will be mailed out to all shareholders beginning on November 19, Poueymirou said. The election period will last three weeks, and shortly afterward the results wil be announced. Poueymirou said that the voters' decision will most likely be the final one.

Poueymirou said the grocery stores' financial troubles could be traced back to the expansion beyond the original 55th Street location to branches at 47th and 53rd Streets. "In expanding to both sites, there wasn't sufficient sales activity that justified those activities, so all the income from the 55th Street store was going to offset expenses at the other two locations," Poueymirou said.

In February, the Co-op and the University negotiated a termination of the lease for the 53rd Street Co-op. In May, the board began an analysis of the Co-Op's financial situation. The 47th Street location closed in 2005, but the Co-op has continued to pay rent for the building.

"Access to high-quality grocery shopping has a direct impact on the quality of life for our faculty, staff and students, and thus our ability to attract people to our community and retain them once they are here," Hank Webber, the University's vice president for community and government affairs said in an e-mail to the campus community. "Having a successful store in this location would keep shoppers and businesses in the neighborhood and bring new business to surrounding retailers."

The University serves as the landlord for the Hyde Park Shopping Center, which includes the 55th Street Co-Op. According to Webber, the Co-op currently owes the University approximately $1.2 million in unpaid rent. Under one option, the University would forgive most of the Co-Op's unpaid rent and help them repay their vendors, while facilitating the opening of a new grocery store on 55h Street within two weeks of the closure.

"The University is supportive of the board's efforts because we believe our community deserves to have a high-quality grocery store," Webber said. "If the Co-op cannot fulfill this role, then we are committed to facilitating a new grocery store coming to the 55th Street location."

The Co-op began in 1932 as a buying club during the Great Depression and opened its first HydePark location in 1933. After a series of gradual expansion, the cooperative opened the 55th Street location in 1959, and at the time was the largest supermarket in the city of Chicago.

Herald article and editorial of November 7, 2007. Co-Op nearing the end? By Yvette Presberry

After losing almost $3 million with the closing of the 47th street Co-op in 2005 and standing a hear behind in rent for the 55th Street Co-op, HydePark Cooperative Society Board President James Poueymirou said the cooperative society is facing the decision to either take out a commercial loan, renegotiate terms with debtors or file for bankruptcy.

"We're in the worst financial condition that we've been in 75 years," Poueymirou said. He added that this board wants to "gain ground and move in a positive direction" while it looks at long-term planning. "The status quo is unacceptable," he said.

Bruce Brandfon, the recently hired general manager of the Co-Op, said it has been difficult for the 55th Street location to profit since it is also paying the rent on the 47th Street store. He said the Co-op could not carry the debt of a rent as large as 47th Street's while the location is shuttered and succeed.

Because the shareholders have a stake in the future of the Co-Op, Poueymirou said a vote would be asked of them to decide the direction the board wil take. A town hall meeting ill be held at 2 p.m. Nov. 18 at the Hyde Park Neighborhood Club, 5480 S. Kenwood Ave. The next day, shareholders will be given ballots regarding options for the Co-op with three weeks to decide. The votes would be due by Dec. 7 and published.

"A simple majority will be sufficient for the vote itself," Poueymirou said. Poueymirou said the debt had risen after the 47th Street Co-op was built. Though that store closed in 2005, the Co-op board still has to pay rent for the empty building because it is locked into a lease until 2023. It is difficult to break since the owner, Certified Grocers, is also its supplier, Poueymirou said.

The board president said that he and his fellow board members have met regularly either weekly or bi-weekly since last spring to review its past financial records and discuss options for the failing cooperative. The board has also spoken with consultants over the matter.

Also involved in the discussions is the University of Chicago (U. of C.), owner of the Hyde Park Shopping Center, which houses the 55th Street Co-op. "The problems have been mounting for years," said Hank Webber, vice president of the U. of C.'s Department of Community and Government Affairs. He added that the university had helped the Co-Op twice by either loaning money or decreasing what was owed in rent.

He said that bankruptcy could be an option for Co-Op Markets if a solution was not found soon. "I think this is very serious," he said. Webber said the university has suggested relieving some of the Co-Op's debt to its creditors in exchange for replacing the Co-Op with another grocer. Webber said that several well-established entities have shown interest in the 55th Street store.

Continuing to function as the property owner, the university would upgrade the store and possibly remodel the inside of the store, he said. "Our role is to...potentially be a part of the solution," Webber said. "Hyde Park deserves a modern, high-quality grocery store."

Ald. Toni Preckwinkle (4th) said she was glad the board is open with its shareholders and customers regarding its financial status. "The Co-Op has been in pretty [poor] financial circumstances for a very long time," Preckwinkle said. "They're bleeding so much red ink."

Herald editorial, November 7, 2007. Are we really going to let the Co-Op sink? (suggests an opportunity for shareholders to give/invest, warns that an outside for-profit corp. will not be nearly as good a listener nor community contributor.)

Hyde Park Cooperative Society Board of Directors President Jim Poueymirou came to the Herald offices Monday morning with a sobering message: The Co-Op board will choose among three options, including closing for good, by the end of the year. Either the board wil secure a $3 million loan, file for bankruptcy or enter into "debt workout"--essentially turning assets over to creditors. Poueymirou told the Herald that the board is considering these options as the only ones left. He also said the board will hold a town hall meeting regarding this decision on Nov. 18, 2 p.m. at the HydePark Neighborhood Club, 5480 S. Kenwood Ave.

We believe another option exists for the Co-Op. With membership somewhere around 35,000--and with, in many cases, one membership accounting for a whole family--such a dramatic decision should only follow a highly publicized, long-term capital campaign. It would take less than $100 per member to reach the $2.5 to $3 million in capital the board is trying to gain through a loan Poueymirou told us the loan was intended not only to wipe out debt--including the debilitating lease on the shuttered 47th Street store--but also for capital improvements on 55th Street. It is quite likely that many Co-Op shoppers would be willing to pitch in to improve their shopping experience.

Since we are highly skeptical there is any real chance of securing a loan--with what assets?--this announcement amounts to the beginning of the end of the Hyde Park Co-Op. This means it is essential that members, regardless of their opinion, must come out to this meeting. Whatever decision is to be mde, it must be through the direction of membership, and that can only happen if the member-owners get involved.

Before the Co-Op's effort at expansion on 47th Street started diverting resources and attention, its contributions to the community were enormous. From education about nutrition to the Hyde Park Co-Op Book Fair, the Co-Op often made important use of its role as a neighborhood institution to improve Hyde Park. These efforts have been driven in part by the cooperative structure of the organization. Cooperatives are designed to follow a set of principles that include a commitment to the community. Don't expect a national chain to be guided by anything but profit.

Poueymirou also told us the board will begin a ballot drive the following day, most likely asking he membership whether they should pursue the "debt workout" option, a choice that will very likely mean turning the store over to a for-profit owner. We once again urge member participation, regardless of your opinion. Whatever happens, members will later complain in vain about an outcome they did not have a hand in shaping.

A ballot referendum on a particular method of putting the Co-Op out out of business seems a lot less important than a referendum on whether the Co-Op should stay in business at all. We would like to see a more pointed ballot question, accompanied with a pledge form. Give people who vote to keep the Co-Op in business a direct means of securing that goal.

We applaud the board for moving in a proactive direction--this is long overdue--but let's give membership as much participation in this important decision-making process as possible.

 

The University's official position and statement of its involvement, offer. From Hank Webber, University Vice President for Community and Government Affairs, November 7, 2007

To: The University Community

From: Hank Webber, Vice President for Community and Government Affairs

Re: Hyde Park Co-op

You may be interested to note a story in today's Hyde Park Herald
(http://www.hpherald.com/) about the future of the Hyde Park Cooperative
Society. The story outlines a set of extremely challenging financial
circumstances that threaten the Co-op's ability to continue to operate
its grocery store at 55th Street.

The Co-op's Board of Directors has been in discussions with the
University about a possible solution to these serious financial
troubles. The board has spent many months considering various options.
One of the options under discussion is an agreement among the Co-op, its
creditors and landlords that would result in the Co-op closing, payments
to its creditors, and a new grocer opening a store in the same location.
The board also is looking at the possibility of obtaining a loan and the
potential for bankruptcy if neither of the first two options proves
feasible.

The University is supportive of the board's efforts because we believe
our community deserves to have a high-quality grocery store. If the
Co-op cannot fulfill this role, then we are committed to facilitating a
new grocery store coming to the 55th Street location.
Access to high-quality grocery shopping has a direct impact on the
quality of life for our faculty, staff and students, and thus our
ability to attract people to our community and retain them once they are
here. In fact, when we surveyed our students earlier this year on their
retail needs, the most frequently cited desire was for "improved grocery
store service." Having a successful store in this location would keep
shoppers and businesses in the neighborhood and bring new business to
surrounding retailers.

The University is the landlord for the Hyde Park Shopping Center which
includes the 55th Street store. The Co-op currently owes the University
approximately $1.2 million in unpaid rent. As part of the proposed
agreement, the University has indicated its willingness to forgive most
of the unpaid rent and to supply additional funds in order to
substantially repay local vendors to whom the Co-op is in debt. These
actions would permit the Co-op to close without the costly process of
bankruptcy proceedings and allow a new grocer to begin operations within
two weeks of closure. All current Co-op employees would have an
opportunity to interview for jobs in the new store as part of the
arrangement with a new grocer.

These actions will not happen unless all interested parties, including
the Co-op board and its other major creditors, can come to an agreement
on the terms. If an agreement is reached, the board has indicated its
intention to put the proposal to a vote of the shareholders. If an
agreement is not reached, the likelihood of bankruptcy is very high. In
either event the University will remain committed to having a new,
high-quality grocer at this site.

The Co-op board will discuss its final recommendation at a town hall
meeting at 2 p.m. on Sunday, November 18, at the Hyde Park Neighborhood
Club, 5480 S. Kenwood Avenue, Chicago. We expect there to be robust
community dialogue about the board's proposed course of action. More
information will be available at www.coopmarkets.com
<http://www.coopmarkets.com/> .

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Report on the November 18, 2007 Co-Op Town Hall Meeting (Herald take follows)

By Gary Ossewaarde

The gymnasium of the Hyde Park Neighborhood Club was packed with Hyde Park Co-op members and others who came to earn about the fate of the 75-year-old grocery cooperative and what their options were in an upcoming three-week balloting period.

The presentations appear to have genuinely changed the minds of several in the diverse audience. The larger number or majority clearly favored any option that would keep the Co-op alive and a cooperative; others, whether favoring the board majority and University of Chicago "debt workout" option or not, thought it best to stop throwing good after bad, allow the Co-op entity to disappear and a new, private grocer to be installed. All were aware that little or no value remained to their shares under any option. General Manager Bruce Brandfon gave a thorough and upbeat report of major changes including re-pricing instituted in the store, which he reported as making a turnaround in sales.

Board President Jim Poueymirou explained the majority board position, Option "A," debt workout with replacement of the Co-op.

James Withrow and Rob Stanek explained Option "B," a restructuring dependent upon a loan and chapter 11 bankruptcy that would allow a new store to be under Co-op management. (A formerly announced option "C," a commercial loan, is out of the picture as non-securable.) They also clarified much the Co-op and cooperative movement, and presented ways the Co-op could start "acting like a cooperative" again and institute best board and managerial practices while concentrating on its one store and welcoming competition.

Union representatives made appeals, and said they will not go quietly.

Arlene Rubin of Project LEAP described the mechanics of the mail-in vote.

The remainder of the meeting was turned over to questions.

Without going into details of complex proposals, Option A offered a University of Chicago (the landlord)-secured transition to a different grocery store with favorable terms, termination of the 47th Street lease, payment of creditors, and forgiveness of most of the back rent. Concern was expressed that no information is given on whether or what store would come in, under what terms, loss of community control, and the character, quality and dependability of a chain store.

Option B involved securing a refinance loan from the National Cooperative Bank (in negotiation) to pay the creditors, filing chapter 11 owner-in-possession bankruptcy right after the vote (should it favor B), stopping payment on the 47th lease, expected filing for closure by the University and reopening under the court with a new supplier. The Co-op would be strapped for years and need a capital drive.

There was strong emotional support and testimonials for Option B, and a pledge drive started--pledges (not money) could be dropped off in a box at the membership desk. But there were many questions about its feasibility and risks--failure would mean liquidation. Rob Stanek suggested that those who prefer more certainty would prefer Option A, those who want the Co-op Option B. Alderman Preckwinkle was among the few who came out strongly against Option B and pointed out the serious risks and scenarios involved therein. Others expressed resentment at the community being "told what to do" especially by the University.


Herald November 21, 2007: Members speak: Save the Co-op

By Yvette Presberry

Through a series of enthusiastic applauses--including a standing ovation--and comment by member-owners, the Hyde Park Cooperative Society's board of directors encountered more than 400 members, hopeful th at the Co-Op might be saved, [one] of the oldest urban cooperative[s,] Sunday as they laid out the two paths from which they are to choose.

Shareholders of the Hyde Park Cooperative Society were given two choices from the board of directors on Sunday to direct the Co-Op's future. The first is a vote for a debt workout in which the University of Chicago would forgive up to $1 million of the cooperative market's rent, pay ff the Co-Op's existing vendors and trade services, and offer the 55th Street store to a new entity while ending the 47th Street lease. The second choice would be to file for Chapter 11 bankruptcy in which the Co-Op continues to function at 55th Street through financial reorganization, attempts to pay all of its creditor[s] in full, holds a capital pledge drive and takes a loan to cover debt to its vendors. The lease for the 47th Street store would also be eliminated by paying a penalty of $2.2 million or 15 percent of the lease's value. The bankruptcy option is contingent on the loan.

"Do not let apathy stand in the way. You have to be involved. If you don't, you get what you don't vote for," said Co-Op Board President James Poueymirou.

There was little evidence of apathy at the Sunday afternoon meeting hosted by the Hyde Park Neighborhood Club, 5480 S. Kenwood Ave. The audience was particularly enthusiastic as board member James Withrow outlined his plan to save the 75-year-old neighborhood institution.

The first choice, called "Option A" by the Co-Op board, would mean that t he Co-Op Market would no longer exist, and the U. of C., as the owner of the Hyde Park Shopping Center, would look for a company to replace the cooperative grocer.

The second choice, which the board called "Option B," consists of the Co-Op reorganizing itself under Chapter 11 bankruptcy in the hopes of keeping the cooperative in existence.

The 47th Street store was closed in 2005 because of declining sales, but the Co-Op was locked into paying rent on the building until 2023 because of a no escape clause on the lease. The space will require build out before it can be rented again, making it a pricey proposition, according to Poueymirou. "When they gutted the store, the inside is pretty much only usable as a warehouse at this time," Poueymirou said. "As a consequence, it's going to take a substantial investment of money to make that rentable space."

Co-Op members will receive a ballot this week by mail to their home addresses by Project LEAP (Legal Elections in All Precincts), a 36-year-old independent election advisory group that has watched over elections for unions, local school councils and other cooperative boards.

Shareholders will have three weeks to vote for one option and mail in their ballots. The ballot must be filled out with the shareholder's membership number, signature and printed name and mailed with a stamp before Monday, Dec. 17 to the address on the ballot. The address will be a neutral site, said Arlene Rubin, executive director of Project Leap. "We guarantee you the security of ballots from start to finish, and thereafter," Rubin said.

Ronald Barliant, a commercial law firm, served as an advisor to the Co-Op board as the directors considered the Co-Op's financial options. Looking at the bankruptcy choice, Barliant said the Co-Op would have to pay its creditors in full if they wanted to remain the leaser of the 55th Street store.

"There would have to be considerable financing in place [and] available to pay for costs of a bankruptcy, which would be fairly extensive," Barliant said. "[There has to be enough money] to finance the cure of the default on the 55th Street store and to deal with the claims of the creditors whom the Co-Op would need to pay in full if the Co-Op intended to remain in ownership of the store."

In both choices, though, Certified Midwest Grocers (CMG), owner of the 47th Street store, would be affected. The Co-Op Board said Option A has CMG buy out the 47th Street store's lease. The second choice has CMG accept a lease termination that would cost the Co-Op $2.2 million that can be spread out over time. Both options have the Co-Op giving up the 47th Street site.

CMG is also the major supplier to the Co-Op. "If we stop making payments to them for rent, they made it very clear that they would cease shipments to your operations," Poueymirou said. The board can't get a different supplier until they pay off what is owed to Certified.

Members who have not received their ballots after two weeks due to an address change can get a replacement ballot from the Co-Op's membership desk. These ballots will be counted after the mailed-in votes have been counted to make sure member do not vote twice. Ballots will have clear positions for both options. "If you want to keep the Co-Op alive, vote for Option B. If uncertainty is a problem for you, then vote for Option A," said Co-Op board member Robert Stanek., who pledged $5,000 of personal money toward the capital campaign.

One supporter of the Co-Op had her $100 check already written for the capital campaign and other supporters voice their concern that they could not purchase shares of the Co-Op. [Share purchases were stopped August 14 since the board could not guarantee their value.]

While most audience members were vocal in their support of keeping the Co-Op open, some others had a different opinion. "You do not throw good money after bad," said Kenwood resident Vanice Billups, Ph.D. "Yes, it should close. Spare us, please, another 5 years or so of agony and excuses when the next measure does not save the Co-Op and when another option is over."

Board secretary James Withrow suggested holding a member drive, where members contribute funds to help the Co-Op pay its debts to survive. "Some people are saying we should die a dignified death," Withrow said. I'd rather go out fighting."

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Herald Editorial Nov. 21 2007. Save the Co-Op

([Herald] Editors Note: The Herald is a creditor of the Hyde Park Co-Op and stands to lose a significant sum in a bankruptcy proceeding.)

The purpose of the 400-plus Hyde Parkers who filled the large hall provided by the Hyde Pak Neighborhood Club, 5480 S. [Kenwood} ave., on Sunday for the "Future of the Co-Op" meeting is clear. To paraphrase Co-Op board member James Withrow, we will not submit to pressure to "die a dignified death." Hyde Parkers who were committed enough to attend that Sunday meeting and let their voices be heard want to save the Co-Op. We agree.

One should not measure the Co-Op based on its recent past. The losses created by the 47th Street miss-step had made it impossible for the Co-Op to act in our community as it has in its past. The Co-Op has been an integral part of the life of the neighborhood from the book fair to the tables of coffee drinkers. Its support of community institutions was a long and proud record. It is hard in the present circumstances to remember that the Co-Op once was one of Chicago's finest grocers, innovating all kinds of things - like an on-site, active home economist. We know it's hard to remember back. The important question is can it be again what it once was. That can only happen if it rids itself of the 47th Street albatross. Plan B makes that happen.

A chapter 11 bankruptcy, we were told Sunday, is the only answer. our question is, does the current board have the guts to go through a bankruptcy? Hyde Park Cooperative Society Board of Directors President Jim Poueymirou recently visited the Herald offices to deliver a somber message: the Co-Op board was mulling three possible futures for the 75-year-old cooperative grocery, with only one guaranteeing its future. Those choices were a bailout loan, a "debt workout"--essentially turning all assets over to creditors--and bankruptcy. As bankruptcy does not guarantee continued existence, it seemed the Co-Op's survival was a the mercy of some beneficent lender's largess, given the rather modest assets of the cooperative, the daunting collection of debt and the onerous 47th Street lease, a million-dollar sinkhole owed to the Co-Op's princip[al] distributor, Certified Grocers, for the next 16 years despite the fact that the location is shuttered.

Sunday's meeting narrowed those three choices into the two essential outcomes of the meeting we urged the Co-Op board to focus on just two weeks ago: Will the Co-Op remain open or not? If the audience reaction is any indication, the vote will be a thunderous "yes," as it should be.

Co-Op board members James withrow and [R]ob Stankek deserve high praise for their principled and well-thought-out defense of and future vision for the Co-Op. The Co-Op will launch a capital campaign and secure funds for renovation and debt consolidation under their plan. The wild enthusiasm of the crowd in response to their promises to keep this venerable neighborhood institution intact and improve its quality bode well for the future--assuming hat enthusiasm is shared by the majority of voters.

That assumption is not altogether warranted. If, as Withrow suggests, the plan to pull the plug on the Co-Op is largely the result of pressure by the University of Chicago, a large number of member-owners could be leveraged by the university to achieve their ends. If you left the meeting feeling reassured that the Co-Op is in safe hands, you got the wrong message; we have to fight to save the Co-Op.

Even beyond the influence of the university, we sometimes fall victim in this neighborhood to a poisoning cynicism that goes beyond critical analysis. Managing change requires a long view, the ability to look both backwards and forwards beyond a handful of years. The Hyde Park Cooperative Society is one of he founding institutions of this nation's cooperative grocery movement, a thriving proof of the dynamic capacity of citizens in action. Hundreds of these grocery co-ops that have been spawned as a result of the efforts of everyday people dot our country. Over the years, they have survived not by caving in to mediocre, short-term thinking but by bold innovation in the application of the cooperative principles that guide every successful cooperative venture. The Co-Op board should keep this in mind as hey move forward. More than 350 food cooperatives across the country, for example, are part of a network that freely shares information about the strategies they employ to compete in the marketplace; this is a network shunned up to now by our co-op. We urge the Co-Op's board to reverse this and other isolating behavior. Success is possible, but innovation is required to achieve that end.

We must also commend this crop of board members for taking long-overdue action. For years, the Co-Op has been guilty of micro management and a lack of vision. Regardless of your position on this issue, all Hyde Parkers owe Poueymirou, Withrow, Stanek and the rest of the board a debt of gratitude for rejecting "business as usual."

We congratulate Bruce Brandfon as well for apparently, in remarkably short order, becoming the kind of popular general manager we have not seen at the Co-Op in a long time. The praise heaped on him by longtime employee and straight-talker Gerald Howell indicates that the board chose wisely. Bruce deserves time to deliver on the promise his tenure is already showing.

The situation is clear. We must all step up to this challenge and deliver. Endorse plan "B," which will involve employing Chapter 11 bankruptcy to dissolve the 47th Street lease, contribute to a capital campaign to both help remodel the Co-Op and eliminate debt and launch a serious effort to get out the vote over the next three weeks.

In their November 28 editorial, the Herald puts forth a third option--have the city arrange a loan to be backed by bonds for the $700,000 empowerment oed on 47th St. interior work, cutting out the lease, and raise a million in pledges.

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Co-Op statement of the situation and Options. (Note: That this is quite different from the newer links below. The letter here was mailed with your ballots except the new Addendum to Option B, and is on still on their website and most likely is still official as of December 2. Here are the addresses for the new Evergreen material. http://www.coopmarkets.com/evergreen/December2007/JustTheFacts.pdf and http://www.coopmarkets.com/evergreen.htm).
A separated link to the first pdf article, called "Just the Facts" and by-lined by the Evergreen editor.
A separated link to the second pdf article, called "University Misinformation" and by-lined by the Evergreen editor.

(Ballot instructions from the Co-Op markets website follow.)

Please note that board member James Withrow states in a published paid article in the Herald November 18 that that letter was to have been written by a team representing the two options, but the task was instead given to a firm employed by the University of Chicago, an interested party.

(Modified Board letter as of December 14, 2007) Dear Hyde Park Cooperative Society Members,

Dear Hyde Park Cooperative Society Members,

You are being asked to cast your ballot and vote for one of two alternatives dealing with the future of the Hyde Park Co-Op. This letter of explanation provides you with the facts and a more detailed explanation of the alternatives.

As a reminder, ballots must be received by mail to Project LEAP Officials at the address indicated on the ballot no later than December 12, 2007, signed by a member in good standing who can be identified by his/her member number and/or signature. Replacement ballots are available at the Co-Op Membership Desk beginning on November 30.
Following the Town Hall meeting on November 18, 2007, the Board conducted an informal poll and a two-thirds majority of the Board of Directors of the Co-Op voted to recommend Proposal A – the Debt Workout - to the shareholders. The Board intends to place significant value on your vote, but for legal purposes, this election should be considered as Advisory to the Board. You should also note, however, that Proposal A depends on substantial rent relief and cash infusions from the University of Chicago and the successor Tenant that are only available if Proposal A is approved by the shareholders.
The vote itself will be received, validated and counted by Project LEAP Officials, an independent and non-partisan organization retained by the Board of Directors to ensure a fair election.

The Facts:

The Co-Op currently has a negative net worth of $1.8 million and has on its books leasehold improvements of $1.65 million that have no value. Therefore, we must borrow in excess of $2.3 million and obtain a $400,000 letter of credit to pay our bills. Over the past 11 months, the Co-Op has been able to survive by ever-mounting debt owed to our vendors, and by not remitting rent owed to our landlord on the 55th Street store, the University of Chicago. While this has enabled a continued flow of product to our store, it has also put the Co-Op further in debt. The rent due is over $1.2 million, and we have $2.3 million in trade payables and accrued expenses that do not have to be paid immediately. In addition, we owe $685,000 related to the empowerment bond for the 47th Street store and a loan of $1.01 million due to Certified Grocers Midwest, Inc.

The 55th Street store earns about $1 million per year. However, we have a lease for the now vacant 47th Street store which runs through 2023 without any escape clause provisions and we are obligated to pay the $1 million in rent to Certified Grocers Midwest, Inc. on that lease per year.

Proposal A – Debt Work Out

The University of Chicago, landlord of the 55th Street store, would forgive back rent of up to $1 million.

Certified Grocers, the landlord of the 47th Street store would forego all future rents (which run at $1 million per year through 2023) for a one time payment of $1 million which includes the release of all outstanding liability by the Co-Op to Certified Grocers.
This proposal would require the closure of the 55th Street store in a short period of time, but would enable the Co-Op to have sufficient cash flow to meet the remaining financial obligations through the controlled and orderly transition to a new grocer.

The University of Chicago and a new tenant at 55th Street would provide sufficient funds to pay off most, if not all of our debts. Thus allowing an exit whereby the Co-Op, after 75 years, can be proud of its past achievements and meet its financial obligations.

The University of Chicago is in final stages of negotiations with a grocer to operate the 55th Street store, and will announce the store as soon as the lease is signed. The proposed tenant will operate a high-quality grocery store, and make significant physical improvements while continuously operating the store.

The proposed tenant will provide the current 40 full time and 140 part time employees an opportunity to interview for employment positions. Due to the overwhelming debt the Co-Op must repay to outside entities, although we would have hoped differently, we do not envision the financial ability to allow members to redeem any of their shares.

Proposal B – Bankruptcy through Chapter 11

This proposal would require filing Bankruptcy under Chapter 11 which would mean the following:

The 55th Street store continues operating with the current management team led by Bruce Brandfon if the conditions below are met.

Under Chapter 11 reorganization, the Co-Op would terminate its lease obligation at the 47th Street store. The cost of such lease termination would be $2.2 million. This amount could be reduced if a new tenant is found quickly once the Co-Op terminates its lease obligation at that site.

A proposal under Bankruptcy gives us the right to accept or reject any leases to which we are currently obligated. Even in rejecting the lease at 47th Street, its provisions obligate us to pay approximately $2.2 million to Certified Grocers.

We would expect to incur approximately $400,000 of costs related to bankruptcy in addition to all other debts to which we have referred.

Board members who support Proposal B and have analyzed the numbers believe that there would be sufficient cash flow to pay normal trade payables and accrued expenses.
Should the Co-Op enter into Chapter 11 reorganization, the Co-Op would have to borrow $2.3 million plus obtain a $400,000 letter of credit to pay down its current trade payable to Certified Grocers, the past due rent to the University of Chicago and the pay down all debt owed to LaSalle Bank. It is the projection of the Board members who support Proposal B that the Co-Op will generate a $7 million positive cash flow from earnings and depreciation over the next five years. The Co-Op would have to pay out $2 million in loan payments for the $2.3 million loan, up to $2.2 million in lease termination costs, $400,000 in bankruptcy costs and $700,000 in other normal business balance sheet reductions, totaling $5.5 million versus a positive cash flow of $7 million, leaving $1.5 million available for capital expenditures and contingencies. In addition, this scenario can only work if the Co-Op receives debtor in possession financing. At this time, the Board has received a preliminary term sheet from the National Cooperative Bank; however final terms will require further negotiations and approvals. Success is not assured.

We sincerely appreciate your patronage and all the support you have given us over the years. It is with heavy hearts that we come to you now for your assistance in making this very difficult decision.

Sincerely,
The Board of Directors
The Hyde Park Cooperative Society, Inc.

NB: The following has been added since the letter was composed. It brings up-to-date financial information that has developed in the last few days:

At the public meeting on November 18th it was stated that there were discussions with the National Cooperative Bank about debtor in possession financing. Those discussions have now ended and the NCB has declined to provide such financing. There are presently no active discussions with other potential sources of debtor in possession financing. As stated at the meeting, without such financing, the Co-op cannot reorganize under Chapter 11 of the Bankruptcy Code. If the Co-Op fails to secure debtor in possession financing, the store would close in seven months, and it is impossible to project, at this time, what percentage on the dollar creditors might receive as payment. Under bankruptcy, all other debts must be satisfied before any money can be returned to shareholders, which we believe is highly unlikely.

The proponents of Proposal B have secured a Term Sheet from the National Cooperative Bank(NCB) for a Commercial loan that is contingent upon the successful resolution of two items: (a) negotiating a termination of lease from Certified Midwest Grocers for the 47th Street site and (b) negotiating repayment of the outstanding rent due for the 55th Street site which is presently $1.2 million in arrears.

Procedures in the Co-Op’s “Future of the Co-Op” Poll

Sometime not long after Thanksgiving, you should receive a ballot in the mail. It is designed so that your identity is kept secret during the count.

The ballot will contain instructions (reprinted below) and you should follow them exactly as written. Ballots that are not properly filled out will not be counted. In the past, Co-Op members have been lax in following directions and many ballots have been spoiled. We hope that will not happen in this poll.

If there is more than one member in your family, up to two members may vote using one of the ballot forms sent to your home, but they must carefully follow the directions explaining how to do so.

Note that the ballot must be folded so that the address of Project LEAP appears on the outside, and mailed to Project LEAP. It may not be turned in at the Co-Op. All ballots must be received at Project LEAP by Wednesday, December 12, 2007.

Members who do not receive ballots by November 30 should go to the Co-Op membership booth with member number and proof of identity to receive a substitute.

Also note that this poll is advisory. It will be up to the Board whether to accept or reject the suggestion of the majority.

OFFICIAL HYDE PARK COOPERATIVE SOCIETY, INC.

“FUTURE OF THE CO-OP”

BALLOT INSTRUCTIONS

1. COMPLETE YOUR MEMBER INFORMATION: For your ballot to be counted, you must provide your member number, printed name(s), and signature(s) (no stickers, please) . For joint memberships, each person must print and sign his or her name. Fill out the MEMBER INFORMATION panel on the other side of these instructions. Your name(s), signature(s), and number will be detached from the ballot before it is counted. FAILURE TO BOTH PRINT AND SIGN YOUR NAME(S) WILL RENDER YOUR BALLOT INVALID.

2. Determine the number of ballots you are eligible to cast:

• If your membership is held by one person, you have only one vote. Complete only BALLOT ONE.

• If TWO NAMES appear on your envelope address and your member account CONTAINS TWO OR MORE SHARES, each of the two shareholders may vote, completing both BALLOT ONE and BALLOT TWO, respectively.

3. Place an “X” in the box next to the Proposal you choose.

4. Fold your ballot along the perforations so the MEMBER INFORMATION panel is on the outside. Do not tear along the perforations.

5. Return your ballot by placing a stamp on the outside of this sheet and mailing to Project LEAP at the address indicated. Hand delivered ballots will not be counted.

If you have questions about the ballot, call Project LEAP at 773-924-4449.

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Letter to the November 28 2007 Herald from General Manager Bruce Brandfon and additional as to the Evergreen

As the new general manager of the Co-Op Market, I feel compelled to address the 26,000 plus member/owners who are facing a difficult decision these next few weeks. The Co-Op has been a part of Hyde Park longer than most people have been alive. Its roots were founded in the midst of the Great Depression and nurtured with high community ideals. Our country and community have seen many changes over these past 75 years. We have experienced the pain of several wars, the shrinking of the world though transportation and communication growth, advances in medicine which had a profound impact on life expectancy just to name a few. And the Co-Op, likewise, has experienced significant ups and downs. In this changing world the Co-Op's role and vision has had to also change with the times. So now, we are faced with a decision as to the fate and relevancy of this age-old institution-one whose first store opened the year Mount Rushmore was dedicated.

There are clearly two opposing camps concerning this decision. Both sides are equally opinionated and passionate. One side supports the university proposed buy-out thus allowing the Co-Op a "dignified death." I have read numerous letters to the editor and blogs which slam the Co-Op for everything from rotten produce, high prices, and empty shelves, to unfriendly employees. I have met many customers (the Co-Op has over 22,000 per week) over the past several months and some have expressed similar concerns. Clearly the Co-Op has not lived up to expectations at all times. But what are reasonable expectations? You know the o ld axiom "the grass is always greener on the other side." Every other store option has its good and bad points. If one was perfect then they would be doing all the business and obviously no one is. The second camp supports the effort to save the Co-Op. They have been called die-hards. Many of this group has shopped the Co-Op for generations. They have grown up with it and take a proud and proprietary view of it versus