A federal bankruptcy judge has ordered Selma’s American Candy Co. to sell its operation in three months.

According to an order signed by U.S. Federal Bankruptcy Judge Margaret Mahoney, the current owners of American Candy must hire a “sales professional” who will begin marketing the company before July 29. By Sept. 16, the company must enter an agreement with a buyer.

“[American Candy] may enter into a letter of intent with a person who is able and who has expressed its willingness to purchase substantially all of [American Candy’s] assets on or before Sept. 16, 2002,” the court order said.

One group based in Paducah, Ky., expressed interest in purchasing the company two weeks ago. Gilliam Candy, owned by James Lacy, said it wanted to buy the company and keep operations in Selma. However, the purchase of American Candy will not be cheap.

According to the court order, American Candy must sell its operation, in cash, for no less “than the amount of all obligations … at the time of closing.” And the company must be paid for when the sale closes.

In other words, American Candy must sell for the amount the 102-year-old Selma company owes Bank of America. The sale price also must include “all other obligations,” which means money owed to vendors of American Candy.

According to the court order, the price of American Candy &045;&045; based on its debt to Bank of America &045;&045; will be steep.

In Section 7 of the court order, American Candy apparently owes more than $13 million to Bank of America. They have a revolving credit line of $5.86 million, plus more than $11,000 in interest fees; they have another revolving credit note worth $2 million, plus interest; plus another two notes worth more than $5 million.

The court order also said American Candy owes “attorney fees, other fees, charges, costs and expenses” under its financial agreement with the bank.

Once American Candy finds a buyer for its Selma company, the federal bankruptcy court then must approve the purchase, as must Bank of America. However, whoever American Candy chooses as its buyer may not end up getting the company.

“On or before Sept. 16, 2002 … all of [American Candy’s] assets … shall be sold subject to higher and better offers, at a sales hearing conducted by the bankruptcy court,” the order says.

In other words, the court will hold a hearing to see if other companies will purchase American Candy for a “higher or better” price than American Candy has negotiated.

It is still unclear what this means for workers in Selma. Nowhere in the order does it say American Candy will begin manufacturing candy products again. There are indications the company will sell off existing inventories.

The court order refers to “receivables” (or money) the company will generate between now and Sept. 16, and in a complex manner, the court dictates how American Candy must use that money. Among the ways American Candy can spend the money are to pay off debt to Bank of America, make payments on insurance for the assets of the company, and make payments to certain employee arrangements made between Bank of America and American Candy.

The court order does not say whether the buyer of American Candy must keep the company in Selma. In general terms, the person who pays the most will get the company.