Allens Inc., a canned and frozen-food company whose headquarters are in Siloam Springs, voluntarily filed for Chapter 11 bankruptcy protection Monday in the United States Bankruptcy Court for the Western District of Arkansas.
Chapter 11 bankruptcy allows a debtor, usually a business, to continue operations while reorganizing its debts so creditors can be paid. In a release, the company said it is making the move with the support of its largest creditors.
“Allens has a long and proud history and we intend to use the reorganization process to become a stronger,more competitive business,” Josh Allen, president and CEO of privately held Allens, said in the release.
In its filing, the company asked to be allowed to continue to pay its 1,173 employees across all of its U.S. operations, including three members of the Allen family. The company’s workforce includes full-time, salaried and temporary workers employed through staffing agencies. The documents indicate the weekly gross wages of the full-time and salaried workers average $774,000.
In the statement, Allen said the support of the company’s suppliers and the dedication of its workers is critical to the company’s future. In addition to its Siloam Springs plant and other Arkansas holdings, the company has operations in Georgia, North Carolina and Wisconsin.
Allens was established in 1926 and is a key player in the economy of Siloam Springs, on Benton County’s border with Oklahoma. Allens is the third-largest employer in that area, behind McKeeFoods Corp., the maker of Little Debbie snack cakes, and poultry processor Simmons Foods Inc., according to the area chamber of commerce.
“Allens is a family company and valued in the community,” said Wayne Mays, president and CEO of the Siloam Springs Chamber of Commerce. “We’ll fight alongside the Allen family.”
Filings with the bankruptcy court show Allens has between $100 million and $500 million in liabilities and the same range of assets, and an estimated 1,000 to 5,000 creditors. More than $92 million is owed to 20 companies. The top three creditors are Ball Metal Food Container Corp., of Broomfield, Colo., with$46.26 million; Crown Cork & Seal USA Inc. of Philadelphia with $18.04 million; and Hartung Brothers Inc. of Madison, Wis., with $7.77 million.
In the statement, the company said that during the reorganization process it intends to operate the business normally, focusing on canned vegetable markets. The company is considering a sale of part or all of the business. It is also trying to sell its facility in Montezuma, Ga., which sells frozen-vegetable products.
Professor Tim Tarvin of the University of Arkansas School of Law, who teaches bankruptcy and nonprofit law, likened Chapter 11 bankruptcy to an economic version of an organ transplant, noting that though not all businesses survive the process, it’s important to try.
“I support second chances,and this process allows for second chances,” Tarvin said.
He said at first blush the filing by Allens seems to be well thought out and that it’s encouraging to see the business’ top creditors are supporting the move.
Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville, said the bankruptcy process is just beginning, so it’s too early to tell how it will shake out for employees, suppliers and customers.
“This is an opportunity for them to get to a stable place,” Deck said.
Alvarez & Marsal, which specializes in turnaround and interim management, is serving as the company’s chief restructuring officer. Lazard Middle Market, a multinational advisory andasset-management firm, is its investment banker. The company’s legal advisers are GreenBerg Traurig, LLP of New York and Mitchell, Williams, Selig, Gates & Woodyard of Little Rock.
In March, Allens cut 150 jobs at its Van Buren plant and shifted some of the work to Siloam Springs. Allens’ Van Buren plant continued to process hominy, refried beans and snack foods, and the local distribution center remained open.
In March 2012, the company said it was selling some of four of its six frozen-vegetable units to a North American subsidiary of Bonduelle Group of France for an undisclosed sum.
Allens had been in merger negotiations with Seneca Foods Corp. of Marion, N.Y., but ended those talks in September 2011.
Business, Pages 23 on 10/29/2013