FAYETTEVILLE - D&T Farms wants Allens Inc. to honor a claim for produce it made under the Perishable Agricultural Commodities Act, but the bankrupt vegetable canner says the sweetpotato grower’s claims don’t meet the criteria.
Bankruptcy Judge Ben Barry heard objections made by Allens to D&T Farms’ claims but made no decision Monday. He gave attorneys for both sides the option of submitting short briefs in the next 15 days and said he would rule afterward. He also continued a hearing on an objection by Allens to claims made under the act of more than $92,000 by Idaho-based Great American Appetizers Inc.
Judge Richard Taylor was scheduled to hear the Allens Perishable Agricultural Commodities Act claims, but Barry took the cases back after the March death of Bankruptcy Judge James M. Mixon of Little Rock.
The Perishable Agriculture Commodities Act regulates the sale of fresh and frozen produce to avoid unfair trade practices and ensures sellers are paid in a timely manner.
North Carolina-based D&T contends it’s owed more than $86,000 in claims valid under the act, which means it should be paid dollar for dollar in preference to other creditors.
In late October, Siloam Springs-based Allens filed for Chapter 11 protection in U.S. Bankruptcy Court for the Western District of Arkansas. Court filings show that Allens owes its primary lenders $114.36 million and its secondary lenders $65.6 million. Chapter 11 allows a business to continue operating while reorganizing its debt under court supervision.
Sager Creek Acquisition Corp., owned by investment funds controlled or advised by two of Allens’ creditors, bought the company in February with a winning bid of $123.8 million. The total value of the deal is just shy of $160 million.
Jason Klinowski, an attorney representing Allens, argued D&T was not properly licensed under the act at the time it was delivering sweet potatoes to the Allens plant in Turkey, N.C., and D&T failed to give Allens timely notice it was filing a Perishable Agricultural Commodities Act claim.
Heather Kennealy, an attorney from the Branan Law Firm in Hillsborough, N.C., representing D&T, countered the farm lacked crucial data to properly bill Allens under the act, and it filed claims with the court as soon as possible once it obtained the information from Allens.
There were $19.18 million in claims made under the act, according to court documents. Estimated remaining claims valued at more than $15 million are yet to be resolved. Additional hearings are scheduled for April.
The Monday hearing concerning Great American Appetizers was continued after the company’s attorney, Mark Amendola of Martyn and Associates of Cleveland, objected to an expert witness Allens wanted to put on the stand. Amendola said the identity of the witness was made known Friday, not allowing enough time to develop a proper defense.
Barry gave Klinowski, Allens’ attorney, the option of paying for the costs of travel for Great American Appetizer’s witnesses and attorney and rescheduling the hearing or moving forward without his expert witness. Klinowski opted for a later hearing.
Allens employs nearly 1,200 people across its U.S. operations. In addition to its Siloam Springs plant and other Arkansas holdings, the company has operations in Georgia, North Carolina and Wisconsin.
Business, Pages 23 on 03/25/2014