A U.S. Bankruptcy Court judge cleared the way for 48 produce companies to be paid a total of more than $8 million when she issued a ruling Oct. 22 in the Adams Produce LLC case.
Lawyers in the case estimate lump sum payments could be mailed as soon as two weeks after the ruling, but said it may take until the end of the year for payments to be wrapped up. All together, the 48 companies had sought about $10 million.
More than 60 companies initially claimed the Birmingham, Ala.-based Adams Produce owed them collectively more than $12 million in claims under the Perishable Agricultural Commodities Act. Some of those claimants did not follow procedures required by the court and were therefore disqualified from the settlement, and others did not actually have secured PACA claims, according to court documents.
Adams filed for Chapter 11 bankruptcy in April this year. During one hearing, Judge Tamara Mitchell said the total number of creditors could top 400.
Rather than using a blanket percentage to pay the 48 PACA creditors, the settlement requires each company’s claim to be figured individually, partly because some are owed interest and legal fees and others are not.
Larry Meuers, a Miami attorney who represented more than 20 PACA creditors — including Monterey, Calif.-based Pro*Act, which sought the largest claim of almost $6.6 million (the settlement reduces that to $4.8 million), credited Adams Produce attorney Chris Carson with making the settlement a reality.
“This case could have died several times, been converted to a Chapter 7 (liquidation) or drug out for more than a year,” Meuers said. “(Carson) got people to come together.”
Jason Kilnowski, a Chicago lawyer who represented Lee’s Produce, Thomasville, Ga., and Grover Bailey Tomato House Inc., Pensacola, Fla., opposed a settlement proposal early on from Meuers and Adams, but said Oct. 23 that the parties eventually found common ground.
Klinowski said the main objection was the plan to have a panel of lawyers representing the biggest two or three PACA creditors handle everything, including having all PACA creditors sign away future rights to recover additional money.
“Ultimately people were very smart about where to draw the line on what to fight over and when to agree,” Klinowski said.
“I think most folks thought they would never see this day come,” Carson said during the hearing Oct. 22.
One of the larger PACA claimants, Alex Kontos Fruit Co. Inc., Birmingham, Ala., is not a signatory to the settlement and is headed to mediation. The company contends Adams Produce owes it $753,747.
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