(UPDATED COVERAGE, March 4) Casa Grande, Ariz., melon growers Red Hawk Farming & Cooling and LBJ Farms have filed for Chapter 12 bankruptcy, as have three officers in the companies.

“They borrowed too much money on one farming venture and could not service the debt,” said Bob Cook, attorney for growers Jack Dixon, Jessie Dixon and Jeremy Dixon.

Red Hawk and LBJ continue to operate, Cook said, and will still do so after reorganization under Chapter 12, a provision for family farmers.

“Only in Chapter 12 are you by law guaranteed the right to continue to be engaged in farming,” he said. “The total indebtedness (of LBJ Farms to Wells Fargo Bank) on the property was north of $4 million. Under Chapter 12 we are permitted to cram down the debt to fair market value on the property, $835,000.”

The five bankruptcy cases involve about $1.5 million each in debt, Cook said, including the Wells Fargo amount.

Besides filing new business plans, the three officers have each applied for $300,000 operating loans under a program offered by the U.S. Department of Agriculture’s Farm Service Agency. In exchange for such loans the USDA would get a first-priority lien on crops, Cook said.

In the first week of March, Jack Dixon returned to the U.S. from Afghanistan, where he worked for the USDA teaching local farmers how to grow grain crops, Cook said.

Red Hawk creditors are scheduled to meet April 12 at the James A. Walsh Courthouse in Tucson, Ariz. That case has 50 creditors. Among them are:

  • National Watermelon Promotion Board;
  • Arizona Department of Agriculture;
  • U.S. Department of Labor;
  • Bulk Bin Packaging, Etc.;
  • CHEP USA;
  • Chip Berry Produce Co.;
  • DSM Sales;
  • George Perry & Sons;
  • Harward Farms Sweet Corn;
  • Lusk Onion Co.;
  • Mesilla Valley Produce;
  • Mill Avenue Produce;
  • Pisciotta Farms & Produce Marketing;
  • Produce Sorters International;
  • Red Book Credit Services;
  • Sefete Produce;
  • T-Val Sales;
  • Vegicorp;
  • Wespak Distributors; and
  • several transportation companies and other organizations.

Red Hawk once sought exemptions from National Watermelon Promotion Board assessments, claiming they violated its First Amendment rights. Red Hawk and LBJ Farms grow watermelons and cantaloupes.

In 2005 a U.S. Department of Agriculture administrative law judge ruled the board’s programs of research, promotion, advertising and consumer education are permitted government speech, denying the claim.

In 2007, Red Hawk paid the assessments for 1999 and 2000.

A board representative declined to comment on the bankruptcy filing, citing confidentiality agreements.

No criminal charges have been filed against the growers, Cook said.