(UPDATED COVERAGE, 5:35 p.m.) A bankruptcy judge ordered Liborio Markets Inc. into Chapter 7 just three days after the U.S. Department of Agriculture lifted a reparation order against the company and members of the Alejo family.
The USDA's Agricultural Marketing Service restored the rights of the Los Angeles company and its principals to do business in the produce industry July 24. The agency stated the company had met its obligation under the Perishable Agricultural Commodities Act.
An unpaid debt of $21,461 to an unnamed Florida supplier spurred the USDA on April 3 to sanction the company and John Alejo, Enrique M. Alejo, Randy M. Alejo, and Enrique J. Alejo.
Regardless of the removal of the sanction, members of the Alejo family and the group of Liborio companies they operate are still in the midst of a multimillion dollar bankruptcy case.
Judge Barry Russell entered an order July 27 converting the Chapter 11 reorganization to a Chapter 7 liquidation.
"... in light of the exigent circumstances associated with the debtor’s business operations, the court determined on its own motion that cause exists to convert the debtor's case from a case under Chapter 11 to Chapter 7, which is in the best interest of creditors..." Russell's order states.
The judge set the following schedule:
- Within 14 days of his order Liborio must file a schedule of unpaid debts incurred after the Chapter 11 case was filed (April 13);
- Within 30 days Liborio must file and transmit to the trustee a final report; and
- Liborio must turn over to the trustee all records and property remaining in its custody and control.
Bankruptcy documents show total debts of $50 million to $100 million. The bankruptcy filing estimates 100-200 creditors, including a $56 million claim by Banco Popular North America.
In its statement of financial affairs filed May 7, Liborio reported gross business revenue of $11 million in 2010, $10.58 million in 2011, and $2.57 million year-to-date at that time for 2012.
Liborio Markets Inc. and the Alejo famiy are also defendants in two federal court disputes with produce suppliers who say they are owed a total of more than $1 million under PACA.
In the federal court cases, Valley Fruit & Produce Co., Los Angeles, is seeking $887,000 and American Produce, Denver, is seeking $199,000. Those cases, both filed Jan. 23, remain pending.
The bankruptcy judge addressed those claims as well as those of other PACA creditors in a separate order July 27. He also gave Banco Popular retroactive control and possession of the stores operated by Liborio and the Alejo family back through July 24.