(UPDATED COVERAGE, 4:20 p.m.) A federal judge has ordered Salinas, Calif.-based Cimino Bros. Produce into chapter 7 bankruptcy liquidation, and the company’s attorneys withdrew from the case for nonpayment.
Cimino Bros. filed for chapter 11 reorganization in November 2009, when its owners agreed to cut monthly salaries by $20,000 to reduce costs. At the time the company had nine employees in Salinas and 15 in Laredo, Texas, where it operated a cooler.
On Oct. 31 in San Jose, Calif., U.S. Bankruptcy Judge Arthur Weissbrodt ordered the conversion to chapter 7, according to court records. A federal trustee sought the change, citing Cimino Bros. for failing to pay a $6,500 quarterly fee and missing a July 31 reporting deadline.
Less than a week before the chapter 7 ruling, Weissbrodt approved Cimino Bros. attorneys’ request to leave the case. Partners Vince Cimino and Armand Cimino told Los Angeles-based firm Levene, Neale, Bender, Yoo & Brill LLP that they could not make further payments, according to court filings.
Cimino Bros. Produce had not paid the bulk of its legal fees since 2009.
No new attorney has filed to represent Cimino Bros. The telephone number listed under the company’s contact information in court records has been disconnected.
“It’s unusual, not to have representation,” said Reidun Stromsheim, a San Francisco attorney who represents Marc Del Piero, trustee for the bankruptcy estate. “But the lawyers worked for a long time and haven’t been paid.”
A meeting of creditors has been scheduled for Dec. 1 in Salinas.
Stromsheim said she and Del Piero, who are new to the case, are uncertain where it will lead.
“We are just scratching the surface,” she said. “We come in last, and we know the least. The case was filed two years ago. A chapter 7 trustee does the same in all cases. They liquidate the assets of the estate and cast around to see if any lawsuits can be filed to claw back money.
“Did somebody get money who shouldn’t have?” Stromsheim said. “I have no idea whether that is the case here.”
Stromsheim said she and Del Piero will get up to speed by talking to business associates and employees of Cimino Bros. Produce.
Vince Cimino owns 50% of the company. Armand Cimino and Stephanie Cimino each have 25% stakes. In bankruptcy filings the company listed about 200 creditors owed between $10 million and $50 million. Assets were reported in the same range.
Cimino Bros.’ financial issues surfaced in October 2009, when a $6.5 million loan from Wells Fargo came due. Wells Fargo seized its $255,000 bank account.
Cimino Bros. dealt primarily in broccoli, with operations in Mexico under Cimino Bros. Co. Produce Mexico, formed in 1998. The company developed the largest national network of Asian foodservice distributors, according to court filings. It reported strong growth between 2004 and 2007, when revenues jumped from $14.6 million to $20.7 million.
A Perishable Agricultural Commodities Act spokeswoman in Tucson said there were no PACA claims against the company. Creditors listed in court documents include transportation companies, financial institutions and government entities.