(March 25) FAISON, N.C. — Carrying a burden of an administrative action filed by the U.S. Department of Agriculture and a debt load of more than $4 million, Southern Produce Distributors Inc. insists it is well on its way out of its woes.

The USDA filed the administrative action against the sweet potato and vegetable shipper for allegedly committing repeated and flagrant violations of the Perishable Agricultural Commodities Act.

The company allegedly failed to pay 53 sellers $4.24 million for perishable agricultural commodities purchased in interstate and foreign commerce between November 2000 and April 2003.

Southern Produce, which has operations in Pioneer and Oak Grove, La.; and Vardeman, Miss., in addition to North Carolina, filed for Chapter 11 bankruptcy protection in the Eastern District of North Carolina-Wilson Division March 31, 2003, just before two creditors were to file an action that would have frozen its assets.


Wayne Miller, who has been president since May 2003 after three years as general manager, stated last fall that the company was working on a plan to lead the company out of its travails. That plan was still in the works as of March 22, he said.

“Probably in the next 30 days, we’re going to confirm a plan with the court, so things are moving along,” Miller said.

He added that the company was operating in the black.

“Our goal is to pay everybody back 100 cents on the dollar, and we are moving in that direction,” he said.

Sale of some property that isn’t related to the business — farmland and beach-related property — will help the company meet those goals, Miller said.

Creditors have until April 5 to file objections to Southern’s reorganization plan.

Southern can request a hearing on the USDA action. Should the USDA find that the firm committed repeated and flagrant violations, the firm could be barred from the produce industry for two years and its principal officers could not be employed by or affiliated with any PACA licensee for one year — and then only with the posting of a USDA-approved surety bond.


Katy Koestner, a PACA attorney with the Naples, Fla.-based Meuers Law Firm, represents two firms that are owed about $130,000 — Daphne, Ala.-based Sirmon Farms and Loxley, Ala.-based Peturis Family Farm.

It was a temporary restraining order filed by Koestner, which would have frozen Southern’s assets, that prompted Southern to file for Chapter 11 bankruptcy.

“It looks like there’s money to pay the creditors. I just think the creditors just need to be proactive in terms of securing the payments,” she said.

If the bankruptcy judge, J. Rich Leonard, approves the plan, then creditors could collect on the proceeds from the pending sale of Southern’s assets, Koestner said.

Miller said he could not predict when the company would emerge from bankruptcy.

“It’s gonna take awhile,” he said. “We didn’t get where we were in a matter of months, and it will take some time to come out of it.”