Category Archives: Key Case Summaries

Belle Foods Files for Chapter 11 Bankruptcy Protection

Belle Foods LogoOn July 1, 2013, Belle Foods LLC filed for Chapter 11 bankruptcy protection in the Northern District of Alabama.

Although Belle Foods presented a top 20 list of unsecured creditors, the business has not yet submitted its full schedules of debts and assets, statement of financial affairs or other required information. The business estimates it owes between $10 million and $50 million in debt and that it holds the same general range in assets.

Belle Foods told the bankruptcy court that its Chapter 11 bankruptcy petition was precipitated by a variety of factors that have led to a deterioration in its business and a lack of liquidity. The debtor cited technical issues with its accounting system during 2012 that led to losses and said it also “experienced issues with its lending structure and relationship.” Additionally, higher payroll taxes in 2013 led to a decline in purchases by the debtor’s customer base, according to documents filed with the court. Furthermore, Belle Foods said it has seen an increased amount of competition in several of its markets from other grocers. With older locations, the debtor explained it has had difficulty competing with the newer grocery stores that have moved into its markets.

Belle Foods is a privately held company that owns and operates a grocery store chain that operates stores under the banners of Belle Foods, Piggly Wiggly and Food World. Combined, Belle Foods LLC states it operates 57 stores in Florida, Georgia, Alabama and Mississippi.

It is not clear from the pleadings how much, if any, PACA debt exists.  I will provide more updates as new information becomes available.

Jason Klinowski Quoted in The Packer’s Recent Article on Pro’s Ranch Markets Bankruptcy

the-packerOn Mary 30, 2013, Tom Karst of The Packer published an article discussing the Pro’s Ranch Markets bankruptcy case and the $7.2 million dollars in anticipated PACA trust claims.  Here is a link to Tom Karst’s article: Retailer Bankruptcy Could Involve Millions in PACA Claims.  In case you did not know, “Pro’s Ranch Markets is a Hispanic-oriented grocery chain with stores in seven stores in Phoenix, one store in Las Cruces, N.M., one store in Albuquerque, N.M., and two stores in El Paso, Texas. The grocery chain employs 2,235 employees in four states, according to court documents.”  Tom’s article quoted Jason as follows:

Jason Klinowski, agricultural and food law attorney from the firm of Freeborn & Peters LLP, Chicago, said the grocery chain apparently has a limited pool of assets from which to pay its creditors.

“If the debtor’s voluntary petition accurately reflects the amount of assets in the debtor’s estate, then I think that PACA creditors will be well-advised to quickly object to the debtor’s use of the cash collateral and start looking for alternative sources of recovery.”

Pro’s Ranch Markets – Bankruptcy UPDATE

Pros Ranch MarketAs reported by SeaFax on May 30, 2013 – Pro’s Ranch Markets has not presented full lists of assets and liabilities or statements of financial affairs, but estimates that liabilities are between $10 million to $50 million. Those documents are due by June 11, unless an extension is requested and granted.

Pro’s Ranch Markets did file a motion to establish procedures and to allow claims of Perishable Agricultural Commodities Act (PACA) claimants and Packers and Stockyards Act (PASA) claimants. The motion states the debtors reviewed their records and identified at least 83 potential PACA claimants, owed about $7.2 million in pre-petition claims potentially subject to PACA.

In addition to the PACA claimants, the debtors have certain vendors who may assert claims pursuant to PASA as a result of providing them with beef, swine and poultry products. The debtors do not think they are subject to PASA.

The motion requests that the bankruptcy court enter an order establishing procedures, allowing claims and authorizing the debtors to pay, in their sole discretion, the pre-petition claims of PACA claimants and PASA claimants.  The obvious danger here is that PACA requires each unpaid supplier to share in the distribution of the PACA trust and an order authorizing the debtor to pay claims on a first come first serve basis could prejudice some PACA creditors.

PRM Family Holding Company LLC is the sole member of the other limited liability company debtors. Prodigio Mercado LLC operates three grocery stores located in Phoenix, AZ. Provenzano’s LLC operates four grocery stores located in Phoenix. Pro’s ABQ Ranch Markets LLC operates two grocery stores located in New Mexico, one in Albuquerque and one in Las Cruces. Pro’s ELP Ranch Markets LLC operates two stores located in El Paso, TX. Pro’s ELP Ranch Markets Beverage Company LLC holds the liquor license for Pro’s ELP Ranch Markets LLC. Pro & Son’s LLC holds title to intellectual property owned by the debtors. Pro’s Ranch Markets (CA) LLC acts as the paymaster, manager, internal wholesaler, oversees trucking and distribution, pays all accounts payable and provides employees to all of the debtors’ stores. Collectively the debtors own and operate 11 retail grocery stores and employ approximately 2,235 full time workers in the stores and other locations.

UPDATE: East Coast Brokers & Packers Bankruptcy

Bankruptcy SignOn March 14, 2013, SeaFax reported that:

East Coast Brokers & Packers Inc and six of its affiliates, Circle M Ranch Inc, Ruskin Vegetable Corporation, Oakwood Place Inc, Byrd Foods of Virginia Inc, Eastern Shore Properties Inc and Stellaro Bay Inc, and the companies’ principals, Batista and Evelyn Madonia, all filed petitions for Chapter 11 bankruptcy between March 6 and March 11 with the U.S. Bankruptcy Court for the Middle District of Florida.

The debtors filed motions March 12 seeking to have the bankruptcy cases jointly administered under East Coast Brokers & Packers Inc, Case #13-02894.

The debtors have not yet presented their schedules, but estimate they hold assets totaling from $50 million to $100 million and owe between 200 and 999 creditors liabilities ranging from $50 million to $100 million.

Although East Coast Brokers & Packers Inc, Circle M Ranch Inc, Ruskin Vegetable Corporation, Oakwood Place Inc and the Madonias each submitted their top 20 list of unsecured creditors, only one of the debtors names food vendors on the documents and claims total $15,500 or less.

According to court documents, East Coast Brokers & Packers Inc distributes tomatoes and other agricultural products farmed by Circle M Ranch Inc. Additionally, East Coast Brokers & Packers Inc is also responsible for managing the packing and sales operations of the Madonias’ businesses.

The debtors informed the bankruptcy court that Ruskin Vegetable Corporation and Byrd Foods of Virginia Inc own packing houses. In addition, court documents state Eastern Shore Properties Inc owns property used to house farm workers, Stellaro Bay Inc owns property in Virginia and Oakwood Place Inc owns property which previously operated as a hotel known as Red Rose Inn & Suites, but the hotel operations have ceased.

Court documents state the Madonias own more than 20% of the issued and outstanding common stock or membership interests in East Coast Brokers & Packers Inc,  Circle M Ranch Inc, Ruskin Vegetable Corporation, Oakwood Place Inc,  Byrd Foods of Virginia Inc, Eastern Shore Properties Inc and Stellaro Bay Inc.

The debtors said in their motions seeking joint administration that their operations are closely intertwined, other than Oakwood Place Inc.

According to the joint administration motion, each of the debtors is indirectly obligated on significant debts, with MetLife Agriculture Investments owed around $46 million by the Madonias, East Coast Brokers & Packers Inc and Circle M Ranch Inc, while Stellaro Bay Inc guaranteed that debt.

The debtors conveyed to the bankruptcy court that their farming operations have been reduced in scope due to their lack of funds to support farming operations, leading to the Chapter 11 filings.

On March 11, 2013, the Bankruptcy Court issued an order setting the initial status conference to be held on March 28, 2013.  At this conference, the court will: (l) fixing a date by which the Debtor−in−Possession (DIP/Trustee) must assume or reject executory contracts or unexpired leases; (2) to set a date by which the DIP or Trustee, if one has been appointed, is to file a disclosure statement and the plan; (3) to set a date to solicit acceptance of the plan; (4) to set a date for which a party of interest, other than the Debtor, may file a plan; (5) to set a date by which a proponent of a plan, other than the Debtor, shall solicit acceptance of the plan; (6) to set the scope and format of the notice concerning a hearing on the approval of the disclosure statement; (7) and to consider whether or not the approval of the disclosure statement should be combined with the hearing on confirmation of the plan.