Pharmaceutical company seeks $67 million from Shopko

Published: Jan. 8, 2019 at 1:49 PM CST
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A pharmaceutical company has filed a complaint against Shopko in attempt to retrieve more than $67 million owed by the Ashwaubenon-based retailer.

McKesson Corporation, based in San Francisco, filed the complaint Jan. 4 in Brown County Circuit Court.

McKesson is the primary supplier of pharmaceuticals, health and beauty care products to Shopko stores.

Court documents obtained by Action 2 News show Shopko owes $67,265,343.24 to McKesson for products supplied to the retailer.

"In or before November 2018, and unbeknownst to McKesson, Shopko was insolvent," reads one document.

The complaint goes on to say that Shopko made misrepresentations "regarding its solvency" and ability to pay for products it purchased from McKesson.

In December, McKesson stated that it read news reports that Shopko was preparing to file for bankruptcy. The company contacted Shopko to find out more. Shopko claimed that the bankruptcy reports were rumors spread by "a disgruntled consulting firm that had not been chosen to advise Shopko," according to court documents.

A payment from Shopko to McKesson was missed on Dec. 7. On Dec. 10, a payment arrived late and from "an out-of-the-ordinary wire transfer."

On Dec. 12, McKesson learned about Shopko's plan to sell its pharmacies to Kroger and Hy-Vee. Shopko stated that it would have the money to make its payment to McKesson once the pharmacies were sold.

Shopko made payments up to Dec. 27. When the next payment was missed, McKesson filed a reclamation demand, asking to reclaim all products for which Shopko has not paid.

On Dec. 31, McKesson contacted Shopko. Representatives for Shopko said the retailer would not be able to pay for the products it had received.

In documents filed on Jan. 4, McKesson asked a Brown County Judge to grant a temporary restraining order against Shopko and force the retailer to return all unpaid for products to McKesson.

It also asked the judge to enter a judgement against Shopko for the $67 million and other fees and costs.

Shopko told he judge that an injunction ordering the return of the products would "jeopardize public health and welfare without any legal or factual support whatsoever."

Attorneys for the retailer say it would force Shopko to remove millions of dollars of prescription drugs from its shelves and take away life-saving drugs from customers.

Shopko's attorneys also say a temporary restraining order would hurt the agreement to sell 75 of its pharmacies to four chains, which would amount to $100 million.

In the end, Judge William Atkinson sided with Shopko on the temporary injunction.

"Court finds significant community health issues would arise if TRO [Temporary Restraining Order] was granted. Court denies motion for TRO," reads Atinkson's order.

A future court hearing in this case is scheduled for Jan. 24.