CHIPPEWA FALLS — Gordy’s Market Inc. will return to court Wednesday, petitioning for a change to the receiver’s duties. Also, the grocery chain’s store in Ladysmith will likely be sold off at that hearing, ahead of an anticipated March 6 auction.

In new court filings this week, Gordy’s Market Inc. is seeking to have the status of the court-appointed receiver changed from section 128 in state code to section 813.6, writing that this switch would be significant moving forward.

Under section 128, food distributor Nash Finch — the company that is suing Gordy’s Market Inc. for $46.2 million — is “the only pre-receivership secured creditor in this case and will ultimately be the only creditor that will ever benefit,” the court document reads. Changing the status of the receiver also would matter in any future bankruptcy proceedings as well.

Gordy’s Market wrote that it is important that the stores remain open and stocked with groceries.

“The stores placed under receivership are materially more valuable to a purchaser as going concerns than if they were closed and sold for asset values,” the court document reads.

One of the motions at that hearing will be to vacate the court’s prior orders, with the company writing “the alleged default and alleged insolvency of GMI was materially caused by the actions of the plaintiff.”

Receiver Michael Polsky — a Milwaukee-based attorney appointed to oversee dissolving the grocery chain and selling off its assets — also filed a document, saying he has reached an agreement to sell off the assets of the Ladysmith store, located at 400 W. 9th St.

Polsky wrote that GMI had already “engaged in extensive negotiations with Great Lakes Foods LLC regarding a purchase agreement for the sale of the Ladysmith assets.”

Polsky met with Great Lakes Foods and its affiliate, Ladysmith Food & Beverage, and reached an agreement to sell the business for $27,000 plus the value of the inventory.

As part of the agreement, the new owners will hire “substantially all” of the employees.

Polsky filed documents Monday stating that the six Gordy’s Market Inc. grocery stores will be auctioned off March 6, with the sales finalized two days later.

The assets referred to in the filing are for six Gordy’s Market Inc. locations: Chippewa Falls downtown, Chippewa Falls on Lake Wissota, Cornell, Ladysmith, Chetek and Barron. The Eau Claire store on Clairemont Avenue, which closed and later reopened, is not included in this lawsuit, as Gordy’s Market does not obtain its groceries for that store from Nash Finch.

The auction will be held at 10 a.m. March 6 at the law offices of Godrey & Kahn in Milwaukee. On March 8, Polsky will present the sale offers to Chippewa County Judge James Isaacson for approval.

To become a qualified bidder at the auction, a company must include an earnest money deposit of $100,000, which Polsky will place in an escrow in a non-interest bearing account. Qualified bidders must submit their deposit by March 1 to be eligible to participate in the auction. Companies wishing to bid on the six stores should have an appointed agent attend the auction. Bids for portions of a lot will not be considered.

The auction will be done in rounds, with each company having 15 minutes to submit a bid, the court document states.

Polsky has set a deadline of April 24 for any creditors of GMI to enter claims with the court if they seek to participate in any dividends.

In the Nash Finch lawsuit, the food distributor claims that GMI owes a total of $46.2 million: $43.2 million in a rebate-able incentive, a $1 million note and $1.9 million in accounts receivable.

In August 2017, Nash Finch filed an $86 million lawsuit against the grocery chain. By Dec. 7, 2017, 1,400 separate creditors filed proof of claims totaling an additional $50.75 million, and Settlers Bank filed a claim of $5 million.

By the end of the year, 20 of the 26 Gordy’s Market locations had either been sold or closed, with the Eau Claire location later reopening.

Jeff Schafer, who returned to the company in March 2017 after a half-year sabbatical, is now leading the new, smaller team. The Schafer family, which founded the chain, acquired the six stores in December 2017 through an auction and working out an agreement with SpartanNash, the new corporate name of Nash Finch.

SpartanNash was the highest bidder, buying the six stores at the auction for $19.8 million. The food distributor then agreed to assign its interest in the purchase to Gordy’s Market Inc. This agreement allows the Schafers to retain ownership of the six stores and keep 340 employees on the payroll.

Some of the other 20 stores, such as one in Stanley, were never sold. Others, like Chippewa Falls south and Rice Lake, remain shuttered and aren’t reopening as grocery stores.