Bankruptcy Judge Tamara Mitchell told a group of lawyers for Pro*Act, Adams Produce Co. LLC, PNC Bank and others they could proceed with their argument May 21 for a so-called settlement in Adams’ bankruptcy case, even though she had just “put a pin in their balloon.”
She also told them they could work with a mediator to settle creditors’ claims, and gave them six minutes to discuss options.
“We understand your concerns… The debtor (Adams) is not interested in moving forward with the settlement (proposal),” said Christopher Carson, an attorney for Adams Produce, Birmingham, Ala. He said the parties would be interested in mediation options.
More hearings are set for May 31. Produce companies with claims under the Perishable Agricultural Commodities Act can still file. Judge Mitchell said the case is of “national interest” partly because of the total number of creditors, which she estimated at 1,400. Adams' total debt is estimated at more than $20 million. The totalnumber of PACA creditors is unknown because companies are still filing claims.
By May 31, the judge expects all parties to have reviewed the Adams Produce financial statements. Those parties include lawyers representing the so-called Pro*Act group — 18 produce companies that supported the settlement proposal — and those representing produce companies opposed the settlement. As of May 21, PACA claims totaled more than $12.2 million.
The lack of financial statements, required in Chapter 11 bankruptcy cases, is a main problem with the proposed settlement, according to Mitchell and attorneys for plaintiffs who opposed the settlement.
“We’re three weeks and three days into the case. There are no schedules, no statement of affairs not even a full (creditors’) matrix at this point. We know very little about this company in terms of financial information,” Mitchell said.
Another key point for the judge and opposing attorneys was the release documents all parties would have had to sign under the proposed settlement. Attorneys Jason Klinowski, of the Chicago firm Freeborn & Peters who is representing Grover Bailey Tomato House Inc., Pensacola, Fla., and Lee’s Produce, Thomasville, Ga., and Steve Leara, representing Alex Kontos Fruit Co. Inc., Birmingham, specifically objected to the releases.
So did the judge, and for many of the same reasons.
Mitchell said she understood Adams Produce and the Pro*Act group had included waiver releases in the proposal to get PNC Bank to buy into the deal. However, she said she could not allow the creditors to blindly sign away future rights to raise questions or pursue additional payments without knowing the financial situation of Adams and PNC Bank.