Struggling to avoid bankruptcy, Salyer American Fresh Foods is closing its doors May 22 after its lenders stopped providing the company with money.
Gerard Rose, a Monterey, Calif.-based attorney representing Salyer American, said the closure came sooner than expected. Rose said remaining 50 to 60 employees will receive their last paychecks May 22, about a week after another 12 were laid off.
âApparently the receiver intends to sell off piecesâ of the company, Rose said.
Salyer American, Monterey, came under the control of Steve Franson, the court-appointed receiver, on May 7. The company is being sued by a group of lenders who claim it hasnât paid back a $35 million loan made in 2007. Salyer American told its growers to stop all planting in late April.
Citing concerns over Salyer American Fresh Foodsâ financial status, those lenders arenât providing the company money to pay growers for crops under cultivation, Franson said in a statement released May 19.
In that statement, Franson said he was told by Salyer Americanâs primary lenders âthat they would not advance (the company) any additional fundsâ because they stand to lose âsignificant sums of money to defaults.â
According to the statement, Franson plans to collect money over the next several months for accounts receivable, securing and selling Salyer Americanâs 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.
Franson said in the statement that he feels âsorry for the growers and employees who have been loyal toâ Salyer American, but that he would not speculate on the cause of the companyâs 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.
SK Foods LP, Lemoore, Calif., 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 Group, Monterey, wants to sell the tomato processors by July before peak production starts, according to an earlier statement from company owner Scott Salyer.