An attorney representing several unpaid vegetable suppliers of defunct Allens Inc. asked a bankruptcy judge in a filing Tuesday to consider quickly an earlier request to alter the sale order, saying he believes the company's new owner is looking to sell.
In December, three former suppliers to Allens Inc. who have more than $12 million in claims, asked bankruptcy Judge Ben Barry to disregard certain language in the Allens sale order that they say is allowing the company to put off payment. Allens buyer, Sager Creek Vegetable Co., and others, objected to altering the sale order, saying its language is clear and agreed upon at the time of the sale.
In the filing Monday, Greg Brown, attorney for the companies with claims under the Perishable Agricultural Commodities Act, told the court it appears Sager Creek is in negotiations with multiple parties to sell all, or substantially all, of the assets it acquired from bankrupt Allens. Sager Creek's attorney didn't confirm or deny negotiations were taking place, according to the filing.
Brown asked Barry to decide on the earlier request to alter the sale order based on what he's already heard or to schedule a hearing on an expedited basis.
"If Sager Creek is permitted to transfer to a third party the assets it acquired from Allens, any litigation by the [Perishable Agricultural Commodities Act] creditors to recover those assets will become exponentially more difficult," Brown wrote. "While it is simple to trace the assets Sager Creek received from Allens, tracing a them to a third party will introduce considerably greater complications."
Siloam Springs-based Sager Creek Vegetable Co. employs about 1,000 people across its U.S. operations. In addition to its Siloam Springs plant, the company has operations in Georgia, North Carolina and Wisconsin.
"We believe Sager Creek is attempting to close the sale on or before March 1, 2015. Therefore time is of the essence," Brown wrote.
In an email statement Tuesday in response to questions about a possible sale, Sager Creek said it has reached a place in its turnaround strategy where its is seeking additional capital to complete its goal of improving productivity, lowering costs and continuing to improve product quality.
"To ensure that we continue to have a strong platform for expansion, we have engaged New York-based Jeffries, an investment banking firm, to explore all strategic alternatives and partnerships to best position the company," the statement read.
The company expects the work with Jeffries will be finished by early in the second quarter and Sager Creek will provide more information then, according to the statement.
Barry has ruled a $9.1 million claim by Hartung Brothers Inc. of Wisconsin, a $1.2 million claim by H.C. Schmieding of Springdale and a $1.9 million claim by D&E Farms of Pennsylvania were valid under the act. The rulings do not include attorney fees and interest.
All the rulings are being appealed to the U.S. District Court of the Western District of Arkansas. The sale order contains language that indicates all valid claims must be deemed not appealable before they are required to be paid.
In the December hearing, Barry encouraged all those involved to work out a payment settlement or other arrangement before he is forced to consider voiding the purchase order. At the time he said undoing the sale order would likely be disruptive and delay payment for creditors.
Chapter 7 trustee Ray Fulmer has asked the court to delay taking up the matter concerning the sale order. He said adversarial proceedings he's filed against the former owners of Allens Inc., their attorneys, and their financial advisers, could make up any shortfall and help pay other vegetable suppliers who did not file suit but who are still owed money.
In late October 2013, Allens filed for Chapter 11 protection. The case has since been shifted to Chapter 7. In February, Allens was bought at auction and renamed Sager Creek Vegetable Co. in July.
Owned by two creditors of the former Allens -- Sankaty Advisors LLC and GB Credit Partners LLC -- Sager Creek bid $124.78 million for the company at auction, in a deal with a total value just shy of $160 million.
Business on 01/14/2015