More than 40 companies say Hunts Point Tropicals Inc. owes them $1.2 million under the Perishable Agricultural Commodities Act, but how much they recover depends on the sale of three units on the Hunts Point Terminal Market.

Hunts Point Tropicals, which operated on the Bronx terminal market, filed for Chapter 11 bankruptcy in May 2011. Some may know the firm as Valdivia Produce Corp., but it has been doing business as Hunts Point Tropicals for several years.

A federal bankruptcy judge ordered the company to sell its three units at the Hunt’s Point terminal market to pay creditors.

However, a dispute about who will be allowed to buy those units — and their value — could be bad news for PACA claimants, according to an attorney involved in the case.

“This is of enormous interest to the PACA creditors because it could mean a 25% difference in what they recover,” said attorney Paul Gentile, who represents some of the creditors as well as C and J Bros. Inc.

C and J is a member of the terminal market, but it does not have a seat on the terminal board. It bid $1 million for the three Hunts Point Tropicals terminal units in August 2011.

The terminal board rejected the bid, citing concerns about C and J’s finances. The company resubmitted the bid, along with bank statements and other documents showing working capital of $2.63 million and cash on hand of $2.6 million, according to court documents.

The board again rejected C and J, refusing to provide a reason, Gentile said.

The judge ordered a second auction, which took place Dec. 16. Two bidders participated: C and J bid $1 million and A&J Produce Corp., bid $750,000. A&J has a seat on the terminal board.

The judge ruled Dec. 20 that C and J’s bid was the winner. However, the board rejected it again in January, even though C and J offered to pay for a year’s worth of maintenance fees upfront.

Instead, the board accepted the lower bid from A&J. The bankruptcy judge asked the board’s attorney why, but he declined to answer, according to court documents.

Board members declined to comment on the situation April 5, citing the pending litigation.

In the meantime, three other units on the same block in the terminal sold for $900,000.

When Gentile asked the bankruptcy judge to intervene, she told him to take the matter to New York state court. He did, and a hearing is set for April 16.

The terminal board has allowed A&J to take “interim possession” of the units, Gentile said.

If the bankruptcy case concludes before the state court resolves the sale issue, Gentile said the bankruptcy judge has told him payments will be made to creditors based on the $750,000 sale price. 

USDA administrative action

The U.S. Department of Agriculture filed an administrative action against Hunts Point Tropicals over allegedly incurring $1.2 million in Perishable Agricultural Commodities Act claims from July 2010 through June 2011.

The company and its president, Nessim Martinez, have 30 days to respond to the April 2 notice, according to Travis Hubbs, a PACA investigator and mediator. The company and Martinez could face sanctions and be barred from working in the produce industry, depending on the outcome of the PACA case.

Some of the companies with the largest PACA claims against Hunts Point Tropicals are:

  • Nico-Mexi Food Inc., Chicago, for $163,385;
  • 7 Monkeys LLC, Palisades Park, N.J., for $108,577;
  • Amazona Tropical Farms, New York City, for $70,787;
  • Paul Steinberg Associates, New York City, for $68,939;
  • Jerry Shulman Produce, Hicksville, N.Y., for $54,415;
  • Index Fresh Inc., Bloomington, Calif., for $49,245; and
  • Weis-Buy Farm Inc., Ft. Myers, Fla., for $45,532.