Creditors lose bid for Allens trust

Allens Inc. will not be required to set up a separate Perishable Agricultural Commodities Act trust account to protect money owed to creditors, according to an order from U.S. Bankruptcy Judge Ben Barry.

Barry filed an order Friday overruling Razorback Group’s objection to the entry of the proposed final cash collateral order. Allens, according to court filings, owes its primary lenders $114.36 million and its secondary lenders $65.6 million.

Some creditors asked that Allens, the canned- and frozen vegetable manufacturer based in Siloam Springs, keep cash in a trust account during its reorganization under Chapter 11. Claimants Razorback Farms Inc. and Central Produce Sales Inc., who are represented by Michael Keaton of Illinois, asked that $7 million in cash be set aside by Allens.

Barry ruled that Allens’ Perishable Agricultural Commodities Act funds did not need to be segregated into a separate trust account.

Keaton argued that if Allens, the third-largest employer in Siloam Springs, had its line of credit revoked for any reason, it would be unable to pay creditors.

“Essentially what [Allens] has is what I’d call a corporate credit card,” Keaton said. “They’ve got the ability to borrow money as long as they keep meeting terms and conditions. If at anytime the debtor doesn’t meet those conditions, that line can be pulled, and if that cash gets yanked back, we’re left with nothing.”

Maria DiConza of Greenberg Traurig in New York is representing Allens. DiConza did not respond to multiple messages seeking comment.

Allens filed for Chapter 11 bankruptcy protection Oct. 28. Chapter 11 allows for a business to continue operating and reorganize its debts under court supervision. Allens, which has approximately 1,200 employees nationwide, reports between $100 million and $500 million in assets.

Oklahoma Gas & Electric Company, Van Buren Municipal Utilities, Source Gas and Siloam Springs withdrew objections previously filed in the case.

All of the parties reached a settlement with Allens regarding what amounts to a security deposit on utility bills owed.

Allens continues to consider selling all or part of its canned- and frozen-foods business.

Business, Pages 23 on 12/17/2013

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