Tidyman’s retirement funds worth nothing

Hundreds of former employee-owners of Tidyman’s LLC have had their retirement funds zeroed out as the company dissolved.

In an Oct. 9 letter sent to for Tidyman’s employees, Mike Davis, former CEO and the trustee of the Tidyman’s Employee Stock Ownership Plan (ESOP), wrote that the company has more debts than assets.

“I regretfully must inform you that the value of the ESOP shares is $0,” Davis wrote to employees. “There will be no further cash distributions made to any of the participants.

“As a significant owner of ESOP shares myself, I share your disappointment.”

Tidyman’s employees bought the grocery chain in 1986 and as of this year owned 60 percent of the business. The remaining 40 percent is owned by Supervalu Inc. of Minnesota.

Just as Tidyman’s employee ownership will not receive any distribution, neither will Supervalu, according to the Davis letter.

Tidyman’s ended its 38-year business run this summer when it announced intentions to sell off its eight remaining stores. Many employees were able to continue their employment with the buyers of the stores.

In June, Davis was careful not to speculate that employees would receive a return on their ESOP shares.

He was unavailable for comment Thursday.

Employees contacted this week said they were disappointed and angered that the value of their ownership stake has been rendered worthless. They declined to be named.

Under an ESOP, profits are diverted into the ownership plan as retirement savings for eligible workers. Unlike traditional company pension plans, however, ESOPs are not insured by the federal government and share the same risks as any company stock plan.

According to Tidyman’s filings with the Internal Revenue Service, cash in the ESOP account dropped to $7.1 million at the end of 2004. It had been $14.6 million in early 2003.

The filings said more than 1,200 people were active participants in Tidyman’s ownership plan.

Part of that decline was due to a $6.2 million legal judgment against Tidyman’s in a gender discrimination lawsuit. The company did not have the proper insurance and had to come up with the cash.