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Oberweis Dairy notifies state of potential layoffs as part of bankruptcy filing

Antonio Perez/Chicago Tribune/TNS

Oberweis Dairy has notified the state it may lay off 127 workers as part of its Chapter 11 bankruptcy filing Friday.

The layoffs would begin at the family-owned North Aurora dairy June 11 because of a plant closure, the notification said.

In a statement Tuesday afternoon, Adam Kraber, president of Oberweis Dairy, said the company had hoped to have an asset purchase agreement with a buyer prior to filing for bankruptcy that would have specified the termination and rehiring of employees. Lacking that, attorneys advised the company to file a WARN notice with the state to cover the possibility of layoffs.

“We have been told by counsel a notice is required if it’s reasonably foreseeable that jobs may be lost, even if there is a possibility or probability that jobs will not be lost,” Kraber said. “Not issuing the notice prior to filing would likely cause an adverse impact on general unsecured creditors.”

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Oberweis Dairy filed for Chapter 11 bankruptcy protection Friday in Chicago after failing to find a buyer to rescue it from financial distress. The century-old dairy, which has been losing money in recent years, owes more than $4 million to its 20 largest unsecured creditors and about $14 million in secured bank debt, according to bankruptcy filings.

The company, known for its old-school bottled milk and ice cream, has 40 stores in Chicago, Indiana, Michigan and St. Louis, grocery distribution and home delivery service. It outsources some manufacturing but has a 27-year-old plant at its North Aurora headquarters.

In its bankruptcy filing, Oberweis Dairy said it had 1,149 employees, of which 933 work part time, mostly in the dairy stores. Its ranks often swell to more than 1,500 employees during the summer months to handle peak demand for ice cream at its stores, Adam Kraber, president of Oberweis Dairy, said in a declaration filed Monday.

Oberweis filed a motion Monday requesting to pay $340,000 in outstanding wages owed to employees. Payroll averaged about $891,000 every two weeks from January through March this year, according to the filing.

None of the employees are represented by a union or subject to a collective bargaining agreement, according to the bankruptcy filing.

The Illinois Worker Adjustment and Retraining Notification Act requires businesses with 75 or more employees to provide the state with 60 days’ advance notice of pending plant closures or mass layoffs.

Started in 1915 by Peter Oberweis, an Aurora dairy farmer, the family-owned business grew from a single horse-drawn wagon to a multistate enterprise with $95 million in revenues last year. But Oberweis Dairy has been losing money in recent years due to increasing consumer demand for dairy alternatives such as plant-based milk, as well as “improvident” capital expenditures, according to the bankruptcy filing.

After four generations in family hands, Jim Oberweis, a Republican politician and grandson of the company founder, made the decision to sell the dairy last year. Unable to find a buyer, the company filed for bankruptcy protection Friday.

Oberweis, 77, who ran unsuccessfully for Illinois governor, U.S senator and congressman, won a seat as an Illinois state senator in 2013 for the 25th District, where he served as Republican spokesperson for the Labor and Commerce Committee. He left his state Senate seat in 2021.

Oberweis did not respond to a request for comment Tuesday.

This story has been updated to clarify that the 127 layoffs are a possibility requiring state notification but may not take place.

rchannick@chicagotribune.com