The board of directors of Hamilton’s only co-op grocery store said goodbye to hundreds of members in an e-mail on Monday as the business signed off amid bankruptcy proceedings.
The Mustard Seed on York Boulevard cited the pandemic and a change in shopping behaviours as part of a recent cash shortfall that saw the entity’s unsecured liabilities exceed assets by well over $300,000.
“On declaration of bankruptcy the volunteer board had to resign,” the board said to members in a statement.
“Our last act as a Board was to write a thank you letter to the staff. All the staff have lost their jobs. This is an unfortunate impact of the bankruptcy.”
The co-op said it was “assigned into bankruptcy” with BDO Canada as the trustee in an effort to relieve its debt and potentially continue without those obligations.
“As a result of bankruptcy, the unsecured creditors like the suppliers and the noteholders may receive some smaller amount in settlement for their liabilities before those liabilities are extinguished,” the board told members.
In late July, the store reached out to members in an attempt to raise $150,000 in funds to pay down debts to suppliers but was only able to secure $26,700 from 61 members.
Following the failed attempt, the board revealed only a pair of member groups had any interest in potentially purchasing the business to save it.
However, after a prospective review of all of the co-op’s financial and legal records, neither party decided to make a bid.
The bankruptcy process is expected to take at least a year or more to be fully completed.
During that time the business may yet be “purchased and continued,” according to the board.
“We are hopeful that if interested member groups do make a timely and reasonable offer that the trustee accepts, the staff be re-hired and paid a living wage consistent with the Mustard Seed’s values.”
The Mustard Seed opened in 2014 and boasted a community that connected local farmers and food suppliers with its members. The store was also known for paying its staff a living wage, but ran into financial challenges when the outlet reported a drop off with sales in 2019.