Members look to future as Good Earth co-op dissolves

Meet

Ed Kemmick/Last Best News

Members of the Good Earth Market co-op crowded onto the ground floor of the grocery store Thursday night to vote on a motion to dissolve the co-op.

The Good Earth Market is officially defunct.

At a special meeting Thursday at the cooperative grocery store and deli in downtown Billings, members present voted 89 to 10 to dissolve the co-op, which had debts of more than $500,000 at mid-month, and assets of about about $150,000.

There were more than 2,500 members as of Oct. 15, but co-op bylaws said dissolution only had to be approved by two-thirds of members present at the special meeting.

The two-hour meeting was punctuated by long hugs and whispered condolences as the 23-year-old co-op came to an end, an event described by one member as “like a death in the family.”

The vote was something of a formality, since the shelves were nearly empty after a week-long going-out-of-business sale, and all the store’s equipment and furnishings were up for sale.

As board member Eric Holm told the assembled members before the vote, “We have not come up with a viable Plan B.”

All employees will be paid for hours worked and paid time off, board President Carol Beam said, but some creditors will not be paid, including vendors of goods and services who were still owed $197,182 as of Oct. 15. The store also owes the IRS and the state of Montana $37,174 in unpaid taxes.

Another $65,760 in member loans will not be repaid, according to a fact sheet distributed at the meeting. The only creditor that will see at least a partial repayment is the National Co-op Grocers association, which made two loans to the Good Earth and is still owed $225,836, not including interest.

Andy Patten, a Billings bankruptcy lawyer who has been advising the Good Earth board, said the NCG has a first lien on all assets. That means the association will be able to claim everything the co-op has available to cover its debts, assets that totaled $151,984 as of Oct. 15.

But the board also decided it had to make good on its debts to employees, who were still owed $17,000 on Oct. 15. That means, apparently, that the NCG will be able to lay claim to about $135,000 in assets.

The other creditors simply won’t be paid, Patten said. He said dissolution is a “non-bankruptcy” means of shutting down a business, with the board itself, not a bankruptcy judge, presiding over the process. He said the board would probably stay together for a couple of months, until everything is resolved.

Before the vote, Beam gave a brief rundown of the past three years, including the introduction of new products, attempts to increase membership and sales, a deli remodel and the discovery of unpaid taxes under a previous financial manager.

But the main story was told in a one-page “annual profit and loss comparison,” which showed the store making a profit of $50,677 in fiscal year 2012, then posting losses in each of the next five years, culminating in losses of $143,705 in the fiscal year that ended on June 30.

Another page in the handout showed that the store needed weekly sales of $48,583, just to meet expenses, not to make a profit. In July, which is generally a good month because of tourist traffic, the store came within a couple thousand dollars of that goal one week, and again in August, giving the board some reason for hope.

Shelves

Ed Kemmick/Last Best News

Most of the downtown store’s shelves were empty by the time of the membership meeting Thursday night.

But in September and October, the store fell far short of that target week after week, missing it by about $17,000 in the second week of October. Against that backdrop, the board held a special meeting 10 days ago.

“The board looked at all this and we just looked at each other and said, ‘We just have to be done now,'” Beam said. That’s when the board decided to recommend dissolution, and when it advised store managers to stop ordering new goods.

The board did take steps to turn around the decline in recent years. Working with advisers from the National Co-op Grocers, the store remodeled its deli last year to make it easier and faster for downtown workers to grab a lunch and go.

The NCG loaned the co-op $150,000 last year, $100,000 of which went to the remodel and $50,000 to pay vendors. That came on top of a $100,000 loan to pay vendors that the NCG made in 2015.

Beam said the NCG was “very bullish” on the Good Earth’s prospects when it first began offering its advice and loans, but in April of 2016 it told the board that a turn-around was going to be more difficult than originally expected. And in July of that year, Beam said, the board discovered “IRS issues.”

She expanded on that later, saying the board found out that a former financial manager for the co-op wrote a check to the IRS for payroll withholdings but never mailed it. Beam fielded a lot of questions from members about that discovery, but said that as bad as the oversight might have been, the debt to the IRS and the state of Montana, of a little more than $37,000, was relatively small in comparison with its other debts.

Although there were lots of questions after Beam made her presentation, many of the members who spoke focused instead on what lies ahead, on the prospects for forming a new co-op or coming up with a new, hybrid store or something like a weekly farmers’ market.

Longtime member Carol Van Tuinen said the biggest mistake the Good Earth made was incorporating as the kind of co-op that charged its members a small annual fee. If members instead had been allowed to purchase equity in the store, as true co-ops do, she said, they would have had much greater incentive to be concerned about the store’s viability.

That point was driven home by another member, Maggie Beeson, who said, in response to numerous questions about what led to the closure, that it all came down to a simple lack of support from members.

“People not shopping here is what killed this store,” she said.

While the written ballots on the dissolution motion were being counted, member Barbara Gulick read messages of gratitude and regret that members filled out on little sheets of paper. In what felt more like a church meeting than a co-op gathering, Gulick read the regrets, then asked all present to join her in saying, in response to each, “We mourn our loss.”

The messages of gratitude were followed by a chorus of “We give our thanks.” Those messages included, “It’s a place where everybody knows your name,” “I got to shop downtown on an almost daily basis” and “Thousands of good conversations with good folks at Good Earth Market.”

Gulick herself, who had compared the closure to a death in the family, said she hoped the promise of the Good Earth would be born again.

“The flower has come to the end of its season,” she said, “but it has dropped its seeds.”

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