Market Basket turmoil pushes N.H. staffing firm into bankruptcy

Supermarket chain battle is ‘latest blow’ for Bedford-based American Resource Staffing

The Market Basket supermarkets dispute has helped force a financially challenged Bedford-based staffing agency over the edge into bankruptcy, according to a filing in U.S. Bankruptcy Court in Manchester.

American Resource Staffing Network Inc., which now manages a payroll of more than 1,000, and the associated American Resource Network both filed for Chapter 11 bankruptcy protection at the end of July, claiming at least $10 million in debts.

ARSN supplies workers mainly to the food industry in Massachusetts and New Hampshire and filed an emergency motion to pay those workers, which was granted Aug. 1.

The list of names attached to the filing indicates that on July 25 the company needed to pay the workers less than $500 each, totaling $287,000 for the week. American Resources Network itself directly employs 41 people.

The company has been in financial trouble for some time, thanks to a “vicious cycle of rising employment tax obligations, on both the state and federal level, and an inability to become current on past-due obligations,” explained Richard Purtell, the sole shareholder and CEO of both companies in an affidavit filed with the court.

Purtell said the companies owed the IRS a total of $8.8 million – debt that accrued for over a decade.

The filing also indicates that ARSN owes the state of Massachusetts $1.9 million, with $1.2 million owed to the Massachusetts Department of Revenue and $628,000 in unemployment compensation taxes.

It also lists the New Hampshire Wage and Hour Division as a creditor, but the filing doesn’t specify the amount owed. All told, ARSN owes unsecured creditors $3 million.

An unannounced Massachusetts sweep of the company’s bank accounts “to the tune of several hundred thousand dollars,” resulted in the company “scrambling to make their current weekly payroll” and forced its tax debt even higher, Purtell said.

But the ongoing problems with Market Basket were the “latest blow,” said Purtell.

ARSN provided workers to companies that supply produce to what Purtell described as the “supermarket powerhouse.” ARSN earned $30,000 a week through that contract, the firm said, but the firing of Market Basket CEO Arthur T. Demoulas and the subsequent employee and management revolt put an end to the suppliers’ sales.

Add to a seasonal slowdown, and the company could not continue to operate and continue to pay off its debts, Purtell said. Without bankruptcy protection, the company would have to shut down and wouldn’t be able to pay workers what they are already owed.

The good news, said Purtell, is that ARSN has a buyer and enough money to continue to operate and even pay off creditors, once business picks up in the fall.

It has $2.2 million in cash, with expenses of $2 million, for August, meaning that at the end of the month it should have $264,000 in cash, growing to $356,000 by the end of September

ARSN – and its bankruptcy attorney, Steven Notinger – did not return calls by NHBR deadline.