Yarnell’s receives offers of buyouts

Filing shows debt of $15.7 million

Yarnell’s ice cream is seen on a store shelf before the company declared bankruptcy in August.
Yarnell’s ice cream is seen on a store shelf before the company declared bankruptcy in August.

— Yarnell’s Ice Cream Co. filed for Chapter 7 bankruptcy protection Monday, nearly two months after the Searcy-based company ceased operations and let go all of its 200 employees.

The company said Monday in a news release that it has received several offers for the company’s property, trademark, recipes and inventory in the past two months after looking unsuccessfully for investors or buyers for months before it stopped production.

“Some of these offers are from entities that have expressed their desire to recommence manufacturing Yarnell’s ice cream in Searcy,” the company said in the release. A company spokesman declined to comment on the offers because they were all subject to nondisclosure agreements, but said all offers were being turned over to the court-appointed bankruptcy trustee.

The private company disclosed its sales figures for the first time in the bankruptcy filing. Sales grew from $41.7 million in 2009 to $46.3 million in 2010. Through six months in 2011, sales were $24.8 million.

Yarnell’s owes its creditors $15.7 million, according to court filings, including $4 million secured by property and equipment to two state agencies: the Arkansas Development Finance Authority and the Arkansas Economic Development Commission. Yarnell’s estimates its assets are worth slightly more than $8 million.

The manufacturer’s largest creditor is Ronnie Cameron, a major shareholder in the company, who is owed $7.2 million. Cameron’s loans are partly secured by Yarnell’s inventory and accounts receivable. The unsecured portion of his claim is $3.8 million.

“[Former Chairman] A. Roger Yarnell and I have been good friends for 20 years,” said Cameron in a prepared statement. “I became involved as a lender because I was trying to help a good friend and a long-term Arkansas company.”

Cameron, who is chief executive officer of Little Rock-based poultry producer Mountainaire Corp., declined to comment further.

Yarnell’s also has unsecured claims for $4.2 million from more than 200 companies. The largest unsecured claim is from Finland-based Huhtamaki Packaging for $393,281.

Many of the creditors, such as Sigma Supply in Hot Springs, provided supplies to Yarnell’s. Sigma is owed $95,382 for specialty packaging material.

Sigma has another $100,000 of this specialty inventory in its warehouse that it kept on hand to quickly fill Yarnell’s requests, said Marcus Bland, Sigma’s credit manager. Sigma met with lawyers Monday to finalize a lawsuit against Yarnell’s, he said.

“It’s very rare that businesses order these materials,” Bland said. “We bought, we paid for it, it’s done. Unless someone else nearby starts shipping ice cream, we won’t be able to move this inventory.”

Coleman Dairy in Little Rock is another creditor. It’s owed $137,175 for cream shipments it made to Yarnell’s in the last weeks of production. Mike Flagg, Coleman’s general manager, was pleased when he was informed Yarnell’s had declared bankruptcy.

“That’s great,” he said. “The family’s had a good reputation and I would hope they would come through. You don’t order something if you don’t plan on paying it.”

Though Yarnell’s claims it owes almost twice what its assets are worth, Flagg said he expected the company to pay back all of its creditors.

“If they borrowed money from the state and banks, they have to pay it back,” he said. “I’m sure the Yarnells can continue to work and earn money.”

Yarnell’s also owes $228,000 to its employees for unused vacation days and remaining balances in employee flexiblebenefits plans. Several workers filed suit against Yarnell’s last week, claiming the company refused to reimburse them for medical expenses incurred after they were fired.

Business, Pages 22 on 08/30/2011

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