An attorney for three creditors of defunct and bankrupt Allens Inc. said Tuesday that they've settled claims with the company's new owners, Sager Creek Vegetable Co., for a little less than $12 million.
Court filings indicate the creditors withdrew a motion for relief from the order that sold Allens to Sager Creek. In return, Sager Creek withdrew its appeals of rulings on the creditors' claims. The creditors supplied fresh produce to Allens before the company filed for bankruptcy
Bankruptcy Judge Ben Barry ruled last year 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 Perishable Agricultural Commodities Act. The rulings do not include attorneys' fees and interest.
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.
The rulings were appealed by Sager Creek to the U.S. District Court of the Western District of Arkansas.
"After extensive negotiations with Sager Creek, we agreed to settle our claims against that company only in exchange for payment of the funds it had committed. Sager Creek agreed in turn to dismiss the appeals, and we withdrew our motion for relief from the Sale Order," Greg Brown, attorney for the creditors, wrote in an email. "We anticipate further litigation will be necessary in order to fully implement the Court's prior decisions in favor of our clients."
Jason Bramlett, an attorney for Sager Creek, did not return messages Tuesday.
Sager Creek attorney Michael Mervis said at a hearing last month there was $11.8 million available under commitments from the sale order to pay off the three outstanding claims, but not a projected $1.6 million in accrued interest and attorney fees.
Brown argued the deal for Sager Creek to purchase Allens should be altered since Sager Creek misrepresented the terms and there was not enough money put aside to pay his clients' claims in full.
Joshua Silverstein, a professor at the W.H. Bowen School of Law at the University of Arkansas at Little Rock who researches and writes about bankruptcy law, said agreements like this are common in bankruptcy cases and the deal likely will not require court approval.
Professor Tim Tarvin of the University of Arkansas School of Law in Fayetteville, who teaches bankruptcy and nonprofit law, said likely both sides reached the conclusion that a settlement would be the most expedient course of action.
"Sometimes economics trumps the law," he said.
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.
In late October 2013 Allens Inc. filed for Chapter 11 protection. It has since been shifted to Chapter 7. In February 2013, the company was bought at auction. It was renamed Sager Creek Vegetable Co. in July. Sager Creek bid $124.78 million for the company, in a deal with a total value just shy of $160 million.
Business on 03/04/2015