FAYETTEVILLE - A bankruptcy judge approved Sager Creek Acquisition Corp. as the buyer for bankrupt Allens Inc. on Tuesday and gave the OK for Mc-Call Farms Inc. to serve as the backup bidder should things fall through.
Bankruptcy Judge Ben Barry called the offer for the company “a good deal” that appears to be the best outcome for all the players involved.
Sager Creek Acquisition Corp. is owned by two creditors of Siloam Springs based Allens - Sankaty Advisors LLC and GB Credit Partners LLC. Allens declared Sager Creek the winner of an auction held last week in a deal with a total value of $159.88 million.
Sankaty Advisors manages more than $21 billion in assets and is a credit affiliate of Bain Capital LLC, which has more than $70 billion in assets under management. GB Credit Partners is the investment management affiliate of Gordon Brothers Group, which originates, structures and invests in private-market debt.
As the backup bidder, privately held McCall Farms Inc., a South Carolina-based canned- and frozen-vegetable company, may be designated the buyer by Allens if the deal with Sager Creek falls through within 25 days.
In documents filed with the court recently, Mark Weinsten, senior managing director for Boston-based FTL Consulting, a financial adviser to Sager Creek, said that under new ownership, Allens will be financially sound, intends to keep most of its employees and has an experienced CEO waiting to run the company.
Allens, a frozen- and canned-vegetable company, employs nearly 1,200 people across all 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.
In late October, 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 and reorganize its debts under court supervision.
During Tuesday’s hearing, Stanley Bond, a Fayetteville based attorney representing several creditors with claims under the Perishable Agricultural Commodities Act, asked Jonathan Hickman,chief restructuring officer of Allens, whether the deal with Sager Creek includes money reserved to pay those owed under the act.
Hickman testified that both the Sager Creek and McCall Farms deals have mechanisms in place to pay all valid claims. The act regulates the sale of fresh and frozen produce to avoid unfair trade practices and make sure that sellers are paid in a timely manner.
There were $19.18 million in claims made under the act, according to reports filed with the court by attorneys for Allens. To date, the company has resolved $1.99 million in claims, and on Tuesday the court approved dismissing $1.42 million in claims that failed to respond to objections as required. The remaining claims valued at $15.75 million from 13 creditors will be considered at a later date by Bankruptcy Judge Richard Taylor.
Barry addressed limited objections by New York based software company Infor Inc., which has a nontransferable license agreement for its copyrighted software with Allens. The new owners will need the software to operate the company. Barry suggested Sager Creek and Infor work on a compromise and, barring that, return to the court for a resolution.
He also set a March 21 hearing for an objection by SSS of Crawford County. SSS contends 80 acres it purchased from Allens that was mistakenly not included in a deed should not be included in the sale of the company’s assets.
Business, Pages 25 on 02/12/2014