Will churn out Yarnell’s, firm says

LITTLE ROCK — A Chicago-based company said in a news release late Friday that it plans to make Yarnell’s ice cream again in Searcy.

Once the $1.3 million sale is approved by a U.S. Bankruptcy Court judge, Schulze and Burch Biscuit Co. said, the company will release more information about its plans. Schulze and Burch has a facility in Searcy, where it employs about 100 people and makes toaster pastries and granola bars.

“We are excited about the opportunity ahead of us to bring a beloved Arkansas brand back to the market,” said Kevin Boyle, Schulze and Burch president and chief executive officer. “The Yarnell’s brand has an excellent reputation and is truly an Arkansas icon. We have also heard that some of the former key employees may be interested in returning to the operation.”

Schulze and Burch said this is its first venture into ice cream in about 50 years. The purchase, however, may be challenged by a Harrison man who claims he bought the rights to some of Yarnell’s intellectual properties, including the ice cream recipes.

The bankruptcy trustee overseeing the sale of Searcy based Yarnell’s said Friday that he wouldn’t have accepted the highest bids on the defunct company’s recipes - deeming them too low.

Instead, trustee Randy Rice sold most of the assets to Schulze and Burch.

The company made an offer after negotiating with Rice while the auction was going on Wednesday.

One of the bidders, David Davison, who owns a heating and air-conditioning company in Harrison, contends the recipes he bid on were bought and paid for, and then his bid was later rejected.

“What it comes down to is, was this a bid or sale,” Davison said. “From my understanding, a bid is subjected to be rejected. But when it’s paid for, it’s no longer a bid and becomes a sale. I went and paid for [the recipes] and got a receipt.” Rice returned the money to Davison.

However, Rice said at a news conference Friday in Little Rock that Davison’s payment of $2,500 for Yarnell’s sugar-as an-ingredient recipes was way too low and he wouldn’t have accepted it. He said the amount was the highest bid taken by the auctioneer but didn’t constitute an agreement.

Rice said he sold the recipes and other intellectual property to Schulze and Burch for more than $38,000, along with the real property and other assets for an additional $1.3 million.

Representatives of Schulze and Burch have not returned numerous phone calls since the auction Wednesday. Davison said he has consulted with lawyers and is considering legal action to obtain ownership of the recipes.

Jeff Holtz, a former 22-year employee of Yarnell’s who worked in the company’s research and development department, bid $1,500 for the sugar-free recipes and about $13,000 for the company’s trademarks, only to have his offer later rejected.

He said not getting the property was a surprise, but that he isn’t pursuing legal action.

“I understand where Mr. Davison is coming from,” Holtz said. “I bid against him for the recipes. Now I wish I would have bought them because it sounds like he is making a big stink out of it. ... He has no skin in the game, he was not involved in the Yarnell’s shutdown and he isn’t involved in it now because he didn’t buy that Yarnell’s property. In my mind, he needs to drop it.”

Rice said his goal wasn’t to sell the assets to a company with plans to reopen the facility, but that he had a duty to maximize the amount collected from the sale of Yarnell’s property to pay the most back to creditors.

Rice also noted that it wasn’t a condition of the sale that Schulze and Burch reopen the facility.

Yarnell’s filed for Chapter 7 bankruptcy in August. It had about 200 employees when it shut down at the end of June, with about 150 working in Searcy. The company closed after years of financial instability and lost business. It was founded in 1932 and had a loyal following.

When it filed for bankruptcy, it listed more than $15 million in debt, including $4 million secured by property and equipment to the Arkansas Development Finance Authority and the Arkansas Economic Development Commission.

Rice said most of the proceeds of Wednesday’s sales, which exceeded $1.5 million for all assets, would be distributed to secured creditors - far from the amount owed.

Other assets, including trucks, cars and freezers, were sold for more than $200,000. Rice said those offers were accepted and that he didn’t know whether Schulze and Burch planned to try to buy those back from the people who bought them.