Tag Archives: Adams Produce Company

PACA Proofs of Claim Due in the Adams Produce Bankruptcy

For those interested, the PACA Claims Procedure Order entered in the Adams Produce Bankruptcy established August 3, 2012 (Today!) as the deadline to file all PACA proofs of claim .  Any party that fails to file their PACA proof of claim by will be forever barred from asserting a PACA claim.

All PACA Trust Creditors must file a  PACA proof of claim no later than today, Friday, August 3, 2012. 

Once all of the PACA claims are asserted, the parties will begin the process of identifying the valid claims and eliminating all others.  Afterwards, the real amount of the PACA trust debt will be known and distributions will follow shortly thereafter.  As with most PACA cases, the validation process is critical because all of the Debtor’s unsecured creditors are waiting to see if there will be enough assets left to pay administrative claims and other unsecured obligations.   The answer to this question will come in the next few months.

Jason Klinowski Quoted in The Packer’s Updated Article on Adams Produce

The Packer quoted Jason Klinowski in its 7/12/2012 updated article announcing the entry of an Agreed Order Establishing a PACA Claims Procedure in the $50 million dollar Adams Produce bankruptcy case, which involves over $16 million in secured debt.

See: PACA Claims Due in Adams Produce Case

In this article, The Packer noted that: “Attorney Jason Klinowski, from Freeborn & Peters in Chicago, and Larry Meuers of Meuers Law Firm in Naples, Fla., represent produce companies seeking payment from Adams and were key players in the development of the plan. They worked with lawyers representing Adams, PNC Bank and other parties to resolve how the PACA claims should move forward.”  Id.

The article also quoted Jason as saying: “Getting the PACA trust beneficiaries paid quickly was our No. 1 priority,” Klinowski said. “A lot of good attorneys worked through some tough issues … Having been intimately involved in that process, I can tell you that it is not only a solid work product but the best way to get the PACA trust beneficiaries paid quickly.”  Id.

With the PACA Claims Procedure in place, here are some critical dates of interest:

EVENT

DEADLINE

Bankruptcy Proof of Claim Deadline

July 6, 2012

PACA Proof of Claim Deadline:

August 3, 2012

PACA Trust Asset Report Deadline:

August 3, 2012

Deadline to Object to PACA Proofs of Claim:

August 24, 2012

Deadline to Object to PACA Trust Asset Report:

August 24, 2012

Deadline to Schedule Meet and Confer:

August 31, 2012

Deadline to Meet and Confer:

September 14, 2012

Deadline to Notify Debtor of Result of Meet and   Confer Conferences:

September 17, 2012

Deadline to file Meet and Confer Report:

September 21, 2012

Deadline to Respond to Claim Objections:

September 28, 2012

Deadline to File PACA Trust Distribution Report:

October 5, 2012

Deadline to Object to PACA Trust Distribution   Report:

October 12, 2012

Deadline to Make First Interim Distribution:

October 19, 2012

Mediation Date for Disputed Claims and Disputed   Assets:

October __, 2012

Deadline to File Motion to Determine Disputed   Claims and Assets

December 7, 2012

Proofs of Claim Due in the Adams Produce Bankruptcy

Although the Court is set to establish a PACA Claims Procedure on July 9, 2012, the deadline to file all proofs of claim (PACA and non-PACA alike)  is July 6, 2012.  Importantly, any party that fails to file their proof of claim by July 6, 2012 will not be able to file their PACA proof of claim after the Court enters an approved order as the July 6, 2012 date is a statutory date.  Please do not be confused.

ALL creditors must file a proof of claim on or before July 6, 2012. 

In addition to meeting the July 6, 2012 deadline, the PACA creditors will be required to file a special PACA Proof of Claim as outlined in Judge Mitchell’s  forthcoming order.  Simply put, the PACA creditors need to be prepared to file two separate proofs of claim.  Any PACA creditor who fails to file any one of the two proofs of claim runs the risk of having the Court deny its claim.  Those familiar with this case can tell you that these dates are going to come fast.  Please do not wait to assert your rights.

Judge Rejects Deal from Adams Produce, PNC Bank and Pro*Act

On May 21, 2012, Judge Mitchell of the U.S. Bankruptcy Court for the Northern District of Alabama rejected a proposed settlement in the Adams Produce Bankruptcy, which the Court identified as a case of “national interest.”

On May 22, 2012, The Packer published an article outlining Judge Mitchell’s reasons for rejecting the proposed settlement, which can be found here:

Judge Rejects Deal from Adams Produce, PNC Bank and Pro*Act

Echoing Jason Klinowski and Brian Jackiw of Freeborn & Peters’ objections to the proposed settlement, the Court cited the “lack of financial statements,” the lack of “schedules, statement of affairs and a full creditors’ matrix.”  As key reasons the Court would not approve the proposed settlement.  The Court went further to say that “we know very little about this company” and we are only “three weeks and three days into this case.”  Simply put, settlement was both premature and overreaching given the timing and all of the conditions contained in the proposal.

Judge Mitchell, agreeing with counsel from Freeborn & Peters, also took issue with the liability releases contained in the proposed settlement agreement.  Specifically, the Court noted that the “deal would have benefitted PNC Bank because it would get other creditors off the books, clearing the way for it to receive payment on a $5 million lien it claims to have against Adams Produce.”    Jason Klinowski and Brian Jackiw of Freeborn & Peters were not willing to allow their clients to sign away their future rights and the Court clearly agreed!

Jason Klinowski Quoted in The Packer’s Updated Article on Adams Produce

The Packer quoted Jason Klinowski in its 5/18/2012 updated article discussing the battle over a proposed settlement in the Adams Produce bankruptcy case, which involves the Debtor, PNC Bank and certain PACA creditors.

See:  Future Recovery Rights at Heart of PACA Case

Jason Klinowski and Brian Jackiw of Freeborn & Peters LLP are leading the opposition to the proposed settlement on behalf of several other PACA trust creditors.  Steve Leara and Jay Clark of Wallace, Jordan, Ratliff & Brandt LLC are an important part of the PACA creditors’ opposition to the proposed settlement and have filed their client’s opposition jointly with Klinowski and Jackiw.   Similarly, Jason Read of Rynn & Janowsky LLP and Howard Spector of Spector & Johnson PLLC have each filed pleadings in opposition to the proposed settlement.

Oral arguments in this highly publicized case will be held on Monday, May 21, 2012 at 10:30 a.m. in the U.S. Bankruptcy Court for the Northern District of Alabama, which is located in Birmingham, Alabama. 

Jason Klinowski Quoted in The Packer’s Recent Article on Adams Produce

 

The Packer quoted Jason Klinowski in its 5/17/2012 article discussing the rapidly unfolding battle over a proposed settlement in the Adams Produce bankruptcy case.

See:  Adams Produce: Bankruptcy Deal Could Hamper PACA Creditors

Jason Klinowski and Brian Jackiw of Freeborn & Peters LLP are leading the opposition to the proposed settlement on behalf of several PACA trust creditors.

Jason Klinowski Cited in The Produce News’ Recent Article on Adams Produce

The Produce News quoted Jason Klinowski in its 5/17/2012 article discussing the rapidly unfolding battle over a proposed settlement in the Adams Produce bankruptcy case.

See:  Creditors Battling Over Potential Adams Produce Settlement

Jason Klinowski and Brian Jackiw of Freeborn & Peters LLP are leading the opposition to the proposed settlement on behalf of several PACA trust creditors.

Adams Produce Company – A Changing Landscape

Adams Produce Company LLC filed a motion May 11 requesting the approval of a proposed settlement between the debtors, PNC Bank, Perishable Agricultural Commodities Act (PACA) claimants and their employees. As part of the proposed settlement, Adams Produce will be authorized to obtain post-petition financing from PNC in the amount of $1.45 million, with the bank being granted a first priority security interest in all of the debtors’ property except for the PACA trust assets.

According to the proposed settlement, the debtors’ employees shall be paid $1 million through the debtor-in-possession loan proceeds, while the total amount of $250,000 shall be transferred to an account set up to pay the costs of administering the PACA trust and the PACA claims procedures and $200,000 will be used to pay certain costs of administration of these cases. The debtors filing anticipates that the settlement amounts paid to the employees pursuant to the proposal will pay the workers in full for their approximately three weeks worth of unpaid wages, and in part for their accrued vacation, holiday and personal time off, health and other employee benefits, payroll deductions and reimbursement expenses.

Pursuant to the proposed settlement, several parties will be released from liability, including a partial release of PNC by the debtors, a partial release of the debtors by the employees and the PACA claimants, a partial release of the PACA claimants by the debtors and a partial release of certain professionals by the PACA claimants, the employees and PNC.

The proposed settlement also establishes an Adams Produce PACA trust, to be administered by a trustee, pursuant to procedures for establishing the validity and payment of PACA claims.

THE OPPOSITION

The problem with this proposed settlement is that it is controlled by the single largest PACA creditor and does not truly reflect the voice of the PACA trust beneficiaries as a whole.  Moreover, the proposed settlement appears to release certain parties from liability under PACA prior to the installation and completion of a PACA claims procedure designed to place a real dollar figure on damages to the PACA trust beneficiaries.  As you can imagine, this leaves many questions (i.e. who will be responsible for any shortfall in the Debtor’s ability to fully pay all the PACA trust claims) and provides no guarantees of full payment to the PACA trust beneficiaries.  Although the proposal may partially repay employees, it will all but deplete the $1.4 million in post-petition financing with arguably no real benefit to remaining creditors, including the PACA trust creditors. More alarmingly, what the proposal does do is insulate the bank and others from potentially millions in liability and in the short-term authorize the use of PACA trust assets to pay the Debtor’s non-PACA trust obligations. 

In opposition to the Debtor’s Motion to Approve Settlement, certain PACA trust beneficiaries recently filed an Adversary Proceeding that seeks the turn-over of the PACA trust assets and the disgorgement of millions of dollars of PACA trust assets allegedly received by various third parties, which is the exact liability the settlement proposal sought to avoid through a deal with the largest PACA trust creditor.  Furthermore, because the issues presented deal with PACA, not bankruptcy law, the creditor group filing the Adversary Proceeding also filed a Motion to Withdraw the Reference requesting the U.S. District Court for the Northern District of Alabama adjudicate the federal PACA trust issues and other claims presented in the Adversary Proceeding instead of the Bankruptcy Court. 

The opposition also seeks to stay the Bankruptcy Court’s consideration of the opposed Motion to Approve Settlement to allow the U.S. District Court an opportunity to rule on the Motion to Withdraw the Reference.  

Stay tuned…  

PACA Trust Litigation Alert

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On April 27, 2012, Adams Produce Company LLC filed for Ch. 11 Bankruptcy and reported approximately $10 million plus in PACA/trade debt.  At this time, several “day one” motions are pending, including a Motion to Sell certain real property assets free and clear of liens.

Please check your A/R to see if this case affects you.  If it does, please do not wait to assert your rights.