By MICHAEL DEMASI
The Albany Business Review

Price Chopper has dropped out of the race to buy 22 bankrupt P&C supermarkets in Central New York, Vermont, New Hampshire and Pennsylvania.

The company also won't pursue a lawsuit against the owner of P&C - Penn Traffic Co. in Syracuse - over a "binding contract" that Price Chopper said it signed to purchase the stores for $54 million.

"It's all done," said Neil Golub, president and CEO of Golub Corp. in Rotterdam, owner of Price Chopper. "It's all over."

Golub had been pursuing the purchase of the P&C stores in U.S. Bankruptcy Court in Delaware, although Penn Traffic's creditors and other interested parties said they favored a competing bid from Williamsville-based Tops Markets LLC.

Tops offered $85 million for all 79 of Penn Traffic's stores, plus $70 million in financial incentives.

Tops made the formal offer a few weeks after Golub Corp. had signed a contract with Penn Traffic to buy 22 of the stores.

Golub and its attorney, Raymond Fink in Buffalo, were upset by the last-minute offer from Tops and the decision by Penn Traffic's creditors to favor that deal.

Golub had threatened to sue to uphold the purchase contract, but opted not to pursue the matter in court.

"It's not worth it," he said.

Winning a lawsuit would have been difficult because a contract signed with a company that has declared bankruptcy isn't final until it's approved by a judge, said Mark Tulis, a former chair of the Bankruptcy Committee of the New York State Bar Association.

It's generally possible to be outbid in Bankruptcy Court.

"The purpose of the court is to maximize the payment to creditors, not to benefit a particular bidder," said Tulis, an attorney at Oxman Tulis Kirkpatrick Whyatt & Geiger LLP in Westchester County.

Meanwhile, a last-minute effort by a group of Penn Traffic workers has surfaced to acquire the financially ailing supermarket chain. But the offer isn't expected to derail plans by Tops to purchase the grocery store's assets.

U.S. Bankruptcy Court Judge Hon. Peter Walsh received a letter Jan. 19 from a consortium of current Penn Traffic workers who are putting together an employee stock-ownership plan to acquire the chain. Bids for Penn Traffic's 79 stores were due to Walsh that day.

The group asked for an extension.

As a result, Walsh canceled an auction for the Penn Traffic assets that had been scheduled for today and set a hearing for Jan. 25. Still, Walsh is expected to approve the Tops bid during the hearing. If that happens, the deal would likely close on Jan. 28.