Citing concerns over the Salyer American Fresh Foods’ financial status, banks aren’t lending the company money to pay growers for crops under cultivation, heightening concerns about the future of the company.

Lenders cut off money to Salyer American

Steve Franson, the court-appointed receiver who took over the failing company in early May, released a statement May 19 that he was told by Salyer American’s primary lenders “that they would not advance (the company) any additional funds” because they stand to lose “significant sums of money to defaults.”

Franson said in the statement that he feels “sorry for the growers and employees who have been loyal to” Salyer American, but that he would not speculate on the cause of the company’s financial troubles, or those of its sister company, SK Foods, which is undergoing bankruptcy proceedings.

According to a source at the company, Franson will not comment further on the issue, and he has not accepted calls from The Packer since appointed by the court in early May.

According to the statement, Franson over will be collecting money over the next several months for accounts receivable, securing and selling Salyer American’s assets that are subject to liens, evaluating and paying legitimate claims of growers who sold commodities to or through Salyer American, and paying other legitimate debts.

The company told its growers to stop all planting in late April.

Lenders claim Salyer American hasn’t paid back a $35 million made in 2007. Salyer American reportedly cut seven positions May 15 and may close based on Franson’s determination.

SK Foods and a tomato processor it owns, RHM Industrial Specialty Foods, Williams, Calif., are in Chapter 11 bankruptcy proceedings with its own lenders, who are trying to recover $130 million they lent the SK Foods in 2007. SK Foods wants to sell the tomato processor by July before peak production starts, according to company owner Scott Salyer.