By MICHAEL DEMASI
The Albany Business Review

The battle between Price Chopper and Tops Markets LLC over control of the bankrupt Penn Traffic Co. chain could be decided in a court hearing at the end of January.

U.S. Bankruptcy Court Judge Hon. Peter Walsh in Delaware set Jan. 25 as the day he will consider competing bids by Price Chopper, Tops and any others to purchase the assets of Penn Traffic Co.

"This auction process should be concluded by then," said Raymond Fink, an attorney for the Buffalo firm Harter Secrest & Emery LLP, which is representing Price Chopper.

Tops, headquartered in Williamsville, has offered $85 million for all of Penn Traffic's 79 stores, a bid deemed the "stalking-horse bid" by the judge during a Jan. 8 hearing.

The 79 stores operate under the flags P&C Foods, Bi-Lo and Quality Markets.

The judge's approval sets in motion a procedure for the court to consider competing bids, including the one from Price Chopper, which is owned by Golub Corp. in Rotterdam.

"Think of the Tops bid as being the baseline from which all other bids would be compared," Fink said. "The court didn't approve the Tops bid saying, ‘You take the 79 stores.' It approved a procedure that may ultimately lead to that, but is subject to competing bids."

Golub Corp. offered $54 million for 22 of the Penn Traffic stores in Central and Western New York, Pennsylvania, Vermont and New Hampshire that operate under the P&C name.

The company wants to gut the stores and reopen them as Price Choppers, with more fresh-food options and services than are currently available at P&C. Doing so would give Golub Corp. a total of 141 stores in six northeastern states and boost employment by about 3,500, to roughly 27,000.

One of the critical steps in the court process will occur Jan. 20, when the unsecured creditors for Syracuse-based Penn Traffic must notify the bidders which offer is best. The creditors already made their preferences known in a court filing last week, saying the Tops deal was superior.

Many of the workers at Tops, like those at Penn Traffic, are represented by the United Food and Commercial Workers union. The union is in favor of the Tops offer.

Employees at Golub Corp. are not unionized.

The court filing, which occurred in the early-morning hours before a scheduled hearing on Jan. 8, angered Fink and Neil Golub, president and CEO of the Price Chopper supermarket chain.

Golub said the company had a "binding contract" with Penn Traffic to purchase 22 of its stores. The offer included a $5.4 million down payment. Golub said the company may sue to uphold the contract.

"Unilaterally, without Price Chopper's approval or consent or any notice, Penn Traffic withdrew their motion to approve the Price Chopper contract," Fink said. "We feel that's a flagrant, clear breach on the part of Penn Traffic, and we will pursue legal remedies."

Haynes and Boone LLP, the New York City law firm that represents Penn Traffic, said the allegation that the contract was breached has "no basis in fact" and declined further comment.

Golub has criticized U.S. Sen. Charles Schumer for backing Tops' offer. Golub called the senator a "shill" for the union. Monday, Schumer's office responded.

"From the beginning, we have strongly advocated for a deal that would save the most jobs and stores, because we must both preserve every job we can in this tough economy and because many of these stores exist where consumers have no other food-shopping options," said Schumer spokesman Max Young. "We have never expressed a preference for any bid, only that the bid chosen maximize jobs retained and stores open."