Koffee Kup and Vermont Bread sales funds to pay lenders before workers

A sign alerting employees to the closure of the Koffee Kup bakery in Burlington is posted on the factory’s front door along with notices of jobs available elsewhere on Tuesday, April 27, 2022, following the abrupt closure of the business and the dismissal of the majority of its workers. . Photo by Glenn Russell / VTDigger

The last-minute surprise sale of Koffee Kup Bakery and its subsidiary Vermont Bread Company to Flowers Foods – the $ 4 billion maker of national brands such as Wonder Bread – advanced on Tuesday when a judge ruled that the undisclosed products could repay lenders $ 8 million in outstanding loans.

But claims from other creditors – including some 250 sacked workers had to wait at least two weeks until lawyers discuss their options before another court hearing on July 6.

“I hope these issues resolve themselves by agreement without the need for a ruling,” Chittenden Superior Court judge Samuel Hoar Jr. told a dozen lawyers. representing the private company and persons requesting payment.

Some 150 Koffee Kup workers in Burlington and 100 Vermont Bread workers in Brattleboro were surprised on April 26 to have their manufacturing and distribution plants shut down abruptly without explanation, leading the judge to appoint a receiver to sell the assets. .

Customers who were hoping Koffee Kup and Vermont Bread would rehire workers and bring local baked goods back to store shelves were shocked on June 7 when the bakeries were sold to Georgia-based Flowers Foods, which quickly released a press release saying he had “no immediate plans to reopen” plants in Burlington or Brattleboro.

An attorney for Koffee Kup, for his part, filed an emergency motion on June 10 asking for the immediate disclosure of sealed information about the deal.

“Koffee Kup entities cannot engage in meaningful discussions regarding the distribution of any surplus product without first knowing and fully understanding the terms and conditions of the sale,” Burlington lawyer Alexandra Edelman wrote in her petition.

Edelman and her client apparently got the information they wanted, as she told the judge on Tuesday “we actually all worked as collaboratively as possible.”

Koffee Kup’s attorney said that while a real estate closing has not yet taken place, the sale has progressed far enough to allow attorneys to see there will be excess funds after paying to KeyBank secured creditors. $ 7.6 million, the Vermont Economic Development Authority $ 213,000 and the Continental Indemnity Co. $ 84,000.

But news on who else might be paid what will not come until another court hearing on July 6.

Workers, for example, complained that the company paid for accumulated vacation and sick leave in their accounts after closing, only to then electronically remove them from their accounts due to a disagreement over responsibility to cover those accounts. obligations.

Vermont Attorney General TJ Donovan filed court documents on May 19 in support of an emergency appeal for employees to be reimbursed nearly $ 800,000.

“This issue is still ongoing and has not been resolved,” Deputy Attorney General Justin Kolber told the judge on Tuesday. “Until that happens, we believe our best interests would justify our involvement. “

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