The Paterson Restoration Corporation issued an $800,000 loan to Food Basics half of which had to be written off following the bankruptcy of A&P, according to records obtained by the Paterson Times.
Municipal officials issued the loan to Food Basics, Inc. on May 10, 2010, according to records, with a maturity date of May 1, 2020.
“The store needed modernizing,” said Jamie Dykes, chairman of the Paterson Restoration Corporation (PRC). The loan was for a refit of the store. He said the Paterson Restoration Corporation, a quasi-governmental organization that issues loans to spur job and economic growth in the city, issued the loan to keep the supermarket in Paterson.
When A&P, which owned Food Basics, defaulted in 2015, the Paterson Restoration Corporation had to write off $418,501.
“They are the only ones that defaulted?” asked councilman Michael Jackson, who has criticized the organization for aggressively going after him for defaulting on a $140,000 loan. He unsuccessfully attempted to obtain default records from the Paterson Restoration Corporation.
Initially, the organization refused to provide records to the Paterson Times. However, after three months of back and forth, the Paterson Restoration Corporation released the records last month. In all, 16 loans are in default, according to records.
“How many of them did they go after like they went after me?” asked Jackson. His City Council pay is being garnished by the organization. “Did they go after Food Basics?”
“We took it through the legal process,” said Dykes. “A&P is defunct. There’s no option or possibility, to my understanding, to recover anything further.”
But economic development director Michael Powell, who also serves as the executive director for the Paterson Restoration Corporation, said there may be some hope.
“Several years from now, the PRC will get some sort of a settlement check,” said Powell.
Powell confirmed the corporation has filed legal paperwork in the supermarket chain’s bankruptcy case. He acknowledged any settlement amount is likely to be far less than the $418,501 owed.
Dykes said the corporation refers delinquent borrowers to its collection agency. He said it also goes after them through the courts. Records show the corporation has in place two pay garnishments.
The Paterson Restoration Corporation was created in 1977 with an $11.1 million federal grant.