Attorneys for Salyer American Fresh Foods question the removal of $4 million from a company account — money they say should have gone to Perishable Agricultural Commodities Act creditors.

Salyer American: Bank took PACA funds

Salyer American claims the receiver, Steve Franson, helped Bank of the West move $4 million from the company’s account to the bank. That money would have been used for secured PACA creditors, and its removal hurt Salyer American by depleting its assets and opening it to “potential civil liability,” according to court documents filed June 18.

In other Salyer American news, a bankruptcy court judge approved the sale of its parent company, SK Foods LP, Monterey, Calif., on June 25.

Dispute over funds

“I have no idea what the bank did with the $4 million,” Salyer American attorney Donald Putterman said.

Franson’s attorney, Reid Everett, did not return a request for comment.

The company is seeking an injunction to keep Bank of the West from moving more money, and return the seized money.

Bank of the West has new attorneys which will likely push back the company’s next court appearance on July 10 another week, Putterman said.

As of May 12, less than a month before the company ceased business, Salyer American had 2,350 contracted acres in the Salinas Valley with 14 growers for more than 10 different commodities, according to court documents. The company had about 860 acres of lettuce contracted — it’s largest commodity — and 335 acres of broccoli. The company also had $3 million in the bank with an additional $7.8 million in net account receivables.

Putterman said Salyer American’s account receivable and assets are enough to pay PACA claims but are under the receiver’s control and may not be available if Bank of the West continues to seize funds.

New lawsuit

The company is facing another lawsuit from a supplier alleging more than $450,000 in unpaid services.

Crop Production Services, Greeley, Colo., filed a lawsuit June 19 claiming Salyer American has not paid for services and supplies over the past four years.

The lawsuit, filed in Monterey County Superior Court, doesn’t specify which services or equipment Salyer American failed to pay but lists “work, labor, services and materials” as well as “goods, wares and merchandise” as areas Salyer American contracted for with Crop Production Services.

Crop Production Services’ Visalia, Calif.-based attorney, E. Warren Gubler, did not return requests for comment.

Putterman said he has not seen the lawsuit and cannot comment on it.

According to its Web site, Crop Production Services was created Jan. 1 from a merger between United Agri Products Distribution Inc., and Western Farm Service, and Crop Production Services, Inc. The company provides farming services that range from pest management to custom seeds.

SK Foods sold

Olam International, a global supply chain manager of agricultural products and food ingredients based in Singapore, is purchasing the assets of SK Foods, in an agreement with the Chapter 11 receiver of SK Foods LP and subsidiary RHM Industrial/Specialty Foods Inc., Williams, Calif. SK Foods is a tomato processing company.

Bradley Sharp of Development Specialists Inc. is the Chapter 11 trustee handling the purchase.

Involuntary bankruptcy proceedings were initiated on SK Foods and RHM in early May, even as company officials were in negotiations to sell and reorganize. SK Foods also has been part of a federal investigation into bribery and price fixing in the tomato-processing industry.