YOUNGSTOWN Creditors, company near deal on Phar-Mor sale
As debate on the drug chain's future continues, $2.7 million in professional fees and expenses was approved.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Officials negotiating the future of Phar-Mor are nearing a deal, one attorney says.
Company executives and the committee representing unsecured creditors in its bankruptcy case should be able to present a proposal to U.S. Bankruptcy Court within seven days, said Michael Gallo, Phar-Mor attorney.
The two groups have been discussing two bids that have been made for all or part of the Youngstown-based discount drugstore chain.
Gallo said Tuesday that the bids from Snyders Drug Stores of Minnesota and Phar-Mor's co-chief executives, Melvyn Estrin and Abbey Butler, both are still alive.
Phar-Mor hopes that the bids can be improved, and it's still open to others making bids, Gallo said.
Talks between the two groups began last month after the creditors asked the court to appoint a trustee to run the company, instead of top management. The creditors said Estrin and Butler were wasting company funds on their own expenses and were not giving adequate consideration to the Snyders offer to take over at least 30 of Phar-Mor's 73 stores.
The creditors suspended their request for a trustee when Phar-Mor agreed to meet over the company's future without Estrin and Butler being involved. Judge William Bodoh intends to consider the trustee request if the two sides don't reach an agreement by May 15.
Brett Miller, an attorney for the creditors, declined to comment but said last month that it would be difficult for Phar-Mor to emerge from bankruptcy court in its present form because of heavy financial losses.
A trade publication says that Snyders, which acquired Columbus-based Drug Emporium, wants Phar-Mor because of its Tamco distribution center in Austintown, which employs about 300. The fate of Phar-Mor's downtown headquarters, which employs about 200, would be less certain.
Details of Butler and Estrin's bid haven't been released, but they could buy the company and make it a private concern, a company official said.
Tuesday, Judge Bodoh approved paying about $2.7 million of professional fees and expenses for work done on the case through Dec. 31 or Jan. 31, depending on the firm.
The largest amount goes to Arthur Andersen, which has served as Phar-Mor adviser for financial and operational matters. It is receiving $744,000 for fees and $67,000 for expenses.
It billed at rates of $180 an hour for analysts and $450 an hour for managing directors. Other acccounting firms charged between $130 and $180 an hour for auditing and analyst work and $625 to $650 an hour for work done by principals.
Also, Judge Bodoh approved selling two liquor licenses that were held by Phar-Mor stores in West Virginia that have closed since the bankruptcy filing. A license in Barboursville was sold for $170,000, and one in Parkersburg was sold for $140,000.
Phar-Mor reported Monday that it lost $12.2 million in the quarter that ended March 31 after losing $7 million the previous quarter.