Ben Franklin Crafts, the Grand Forks store that still owes the city of East Grand Forks $408,000 from when it was at the city-owned Riverwalk Centre mall, is holding what it calls a "liquidation sale."
Liquidation of inventory can be a step toward closing a store, but East Side city officials are coy about whether they know this to be the case or not. The store's bankruptcy attorney David Johnson did not return a request for comments.
A local industry source with knowledge of the situation confirmed with the Herald on Thursday, however, that the store is closing. The sale's relatively modest 30 percent savings, the source said, is likely just the start. Retailers typically ratchet up the savings over a period of many weeks.
An earlier sign of mounting trouble may be the store's failure to report its financial condition to creditors. The store had filed for Chapter 11 bankruptcy protection nearly a year ago when it moved out of the Riverwalk Centre while owing the city back rent and loans. But, in May, a federal judge declined to grant that protection. The reason: The store did not file monthly financial reports as required.
The reports are important because they tell creditors and the government the likelihood that a business under Chapter 11 protection has any chance of revival.
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East Grand Forks city administrator Bob Brooks said the city has not received any reports since that time.
That was 107 days ago Thursday.
The city is one of three secured creditors - meaning they have direct claim to store assets - along with Community Bank of the Red River Valley and the U.S. Internal Revenue Service. The bank, however, is in the top position.
Asked if the city was likely to get anything if the store closed, Brooks said, "I don't know if we will. One thing I can guarantee is the citizens won't stand for us sitting still."
Asked if the fees the city is paying its bankruptcy attorney, Kip Kaler, might exceed anything the city gets, Brooks said the fees are not substantial at this point, somewhere in the four figures. "On the other hand," he said, "we're looking at a six-digit figure to collect."
