Jensen Farms bankruptcy attorney Jim Markus, of Markus Williams Young & Zimmermann LLC, Denver, said the owners of Jensen Farms, Holly, Colo., hope to farm again, though they have not planted crops this year. Owner Eric Jensen was not available for comment and the Jensen Farms phone line has been disconnected.
Resolving the Chapter 11 bankruptcy is expected to clear the way for more than 50 claims against Jensen Farms and the 2011 listeria outbreak linked to the its cantaloupes.
That will be the first step in a process to establish a trust fund for the victims that Frontera Produce and PrimusLabs may elect to contribute to, said attorney Bill Marler of the Seattle law firm Marler Clark LLP.
In papers filed May 25, Jensen Farms estimates it has 50 to 99 creditors. The document showed estimated assets between $1 million and $10 million, and estimated liabilities between $10 million and $50 million dollars.
More than 30 deaths have been attributed to the outbreak, which the Food and Drug Administration said was likely spread by inadequate food safety procedures at the Jensen Farms packing facility.
Edinburg, Texas-based Frontera Produce, marketer of the cantaloupes, is named as a defendant in some of the lawsuits, as is Primuslabs.
“Settlement discussions are ongoing so details are not available, except to say that we are exploring various resolution options,” Will Steele, president and chief executive officer of the company, said in a statement.
Bob Stovicek, president of PrimusLabs.com, Santa Maria, could not be reached for comment about the claims settlement process.
Markus said the Chapter 11 filing should free up millions of dollars in insurance and other funds to pay victims of the outbreak.
Travelers Insurance is putting up $2.5 million for the claims resolution process, he said. Pepper Equipment, maker of washing equipment used at Jensen Farms, and BioFood Safety Inc., a third-party food safety auditor subcontracted by Primus Labs, are contributing a total of about $2 million.
Marler said lawyers for the plaintiffs have also been talking with Primus and Frontera to join in this process with Pepper Equipment, BioFood Safety and Jensen.
Markus said the bankruptcy filing has been done with the support of the attorneys for the plaintiffs. There are more than 50 known claims against Jensen Farms, he said.
Court records show the current partners of Jensen Farms as ESJ Inc., of Holly and Biologik, also of Holly. Eric Jensen is president of ESJ Inc.
Marler said there are 45 claims by victims of the outbreak against Jensen, with 39 claims represented by Marler Clark and six represented by other lawyers.
“The unfortunate thing — less so for the victims but more so for the rest of the chain of distribution — is the fact that Jensen Farms had such low insurance limits,” Marler said.
With $2 million and modest assets otherwise, the commercial liability and the personal injury liability drove them towards the bankruptcy filing.
Marler said it may take upwards of $75 million or more to satisfy existing claims from victims of the outbreak.
He said $50 million was spent to resolve 100 claims tied to the 2006 E. Coli outbreak in spinach that saw only five deaths.
Marler said in the best case scenario, all the claims might be resolved by October. The worst case scenario is that the only money put in the trust fund is the $4.5 million from Jensen Farms, BioFood Safety and Pepper Equipment. After that, Marler said litigation amongst Frontera, Primus and retailers is likely to be taken up again with 45 cases in a dozen or more states.