(UPDATED COVERAGE, June 12) Before Salyer American Fresh Foodsâ abrupt closure in May, company executives were working to rename and sell the company to distance itself from its troubled owner, SK Foods Group, Monterey, Calif.
Court documents filed June 5 show Salyer Americanâs lenders heard a presentation in February and April outlining plans to rename Salyer American after its brand to American Classic Fresh Foods, use a different logo, move the Monterey-based company back to Salinas, Calif., and start a major media campaign announcing a new owner.
Salyer American came under receivership in May after its lenders sued claiming the company failed to pay back $35 million in loans. Salyer American closed its doors May 22.
SK Foods is in bankruptcy proceedings to sell its tomato processing division by the end of the month. Itâs also part of a federal investigation into price-fixing in the tomato-processing industry.
Court documents also indicate Salyer American lost $13 million to $15 million in business because of SK Foodsâ ongoing legal problems.
Former Salyer American president Eric Schwartz, working as a consultant to receiver Steve Franson, declined to comment on the June 5 court filings.
Salyer Americanâs attorney, Donald Putterman, did not return a request for comment.
Marci Bracco, Salyer Americanâs former director of marketing, said she started work on a marketing and image campaign for the company in March and took part in the April presentation to lenders.
âWe had a lot of clients tell our sales staff that they were concerned about the validity of (Salyer American) as a company because of what was going on with SK Foods,â Bracco said.
Salyer American was also working on restructuring its commodity base, switching to more celery and romaine hearts production and getting into strawberries by 2010, court documents show.
The company also wanted to change its customer base, moving away from wholesalers and brokers to retail and foodservice customers. Salyer American also considered selling its share in a local cooler. The company also planned to stop fronting all costs for the entire season and change its âgrower disbursementâ to a âpool system.â
Salyer American told its lenders in the presentation about boosting production among its leading commodities, including pushing last yearâs 1.4 million case of celery to 1.5 million cases and last yearâs 3 million cases of leaf lettuces to 3.5 million cases.
Court documents also show Salyer American executives planned to get iceberg production back to âhistoric levelsâ in two years.
The âfarming model is broken,â the company executives said in the presentation notes, adding they wanted to change its business model so âyield swingsâ were more manageable and predictable.
Though court documents show Salyer American lost $5.9 million last year, 2009 started off strong with the company earning $3.8 million in net income.
In Salyer Americanâs other legal issues, a Monterey County Superior Court judge granted the company two weeks to resolve its problems with the court-appointed receiver.
Judge Robert OâFarrell said he plans to give Salyer American and the receiver until June 19 to settle a dispute over the details of a court order granting Franson the authority to secure the companyâs assets.
The judge said he needs more time to consider both partiesâ arguments and wants Fransonâs attorney, Salyer Americanâs lender (Bank of the West) and Salyer American to see if they can work out a compromise.
Judge OâFarrell did grant a request to remove American Cooling Inc. from the lawsuit and the receiverâs estate.
Michael Azzopardi, who co-owns American Cooling, a produce cooler in Castroville, Calif., with Salyer American, asked the judge to remove the facility from the lawsuit to avoid forced sale under receivership.