Michael’s Market files for bankruptcy protection

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Updated: February 6, 2012 8:51AM

Michael’s Market Inc., which includes six stores in the Chicago metropolitan area, has filed for Chapter 11 bankruptcy protection and is blaming its lender, Premier Bank of Wilmette, for its woes citing regulatory problems at the bank.

In bankruptcy documents, Michael’s Market Inc. said nearly all of the stores are profitable, have significant customer bases and that the stores have averaged more than $50 million in annual revenue for 2009 through 2011.

The stores included in the bankruptcy filing are Harvey Fresh Market in Harvey, Michael’s Fresh Market stores in Naperville and Chicago; North Avenue Fresh Market in Oak Park; Cermak Produce in Chicago and Mayfair Market in Chicago.

The stores expect to successfully reorganize, said Forrest Lammiman, an attorney at Meltzer, Purtill & Stelle LLC, which is representing the grocer.

“The financial difficulties experienced by the debtors are due in large part to the freeze on lending imposed by the lender beginning in the fall of 2010,” the grocery retailer said in a court filing, adding this “freeze on the lender’s extension on working capital to the debtors was due not to problems with the financial performance of the debtors, but primarily was caused by the lender’s own financial and regulatory problems.”

The filing noted a cease and desist consent order was entered into between the bank, the Federal Deposit Insurance Corp. and the Illinois Department of Financial and Professional Regulation in September 2010.

The bank’s “regulatory problems apparently have made it impossible for the lender to provide the stores with sufficient working capital to permit the debtors to adequately provide their customers with the desired range and depth of inventory,” the filing said.

The bank did not return a call for comment.