# Groeb Farms Goes Bankrupt



## clyderoad (Jun 10, 2012)

Not to step on Rader's toes, but I saw it here:
http://online.wsj.com/article/SB10001424052702303722604579111571351841650.html


----------



## Barry (Dec 28, 1999)

On their website:

"Worldwide leadership in honey processing and best-in-class producer of wholesome food ingredients, industrial sweeteners, food service products, and value-added retail products."

"best-in-class producer", I guess they're claiming to be the best in honey laundering?

"value-added", Chinese honey?


----------



## Rader Sidetrack (Nov 30, 2011)

This bankruptcy isn't necessarily goring to take Groeb Farms out of the market. Here is a press release they put out:


> *Groeb Farms, Inc. Announces Recapitalization And Reorganization Plan*
> 
> *Normal Business Operations to Continue Under Chapter 11 Process*
> 
> ...


Note the words above in the headline, "Normal operations to Continue", and then there is this gem in the text:


> The bankruptcy is based on a prepackaged reorganization that releases the company from its legacy liabilities, allowing us to emerge as a strong, well-capitalized company, under new ownership, with a continued commitment to world class products and services, customer satisfaction and _*supply chain integrity.*_"


"continued supply chain integrity"? :scratch: 

:ws:


----------



## matt1954 (Sep 8, 2010)

That is common in Chapter 11. "normal operations to continue". The trick is if they can exit Chap 11 or a Trustee decides to liquidate the operation. If you are a creditor, you might get 10 cents on the dollar. Once, I was ordered by a Trustee to return payments I had received from the debtor in a Chap 11. That really sucks. WORLDCOM still owes me more money from their bankruptcy and I had to write off a lot. It really p****ed me off.


----------



## Rader Sidetrack (Nov 30, 2011)

If you read the press release, it also says this is a "_pre-packaged_" bankruptcy. That generally means that everybody that _counts _is "onboard" and the whole thing is not likely to be stopped.


----------



## AstroBee (Jan 3, 2003)

matt1954 said:


> WORLDCOM still owes me more money from their bankruptcy and I had to write off a lot. It really p****ed me off.


Yeah, and GM owes me a lot when they washed their hands of us little guys. I'll never buy a GM vehicle again!!

-sorry about the sidetrack......


----------



## Specialkayme (Sep 4, 2005)

Rader Sidetrack said:


> If you read the press release, it also says this is a "_pre-packaged_" bankruptcy. That generally means that everybody that _counts _is "onboard" and the whole thing is not likely to be stopped.


Not true. A pre-packaged bankruptcy usually means that the Petition, Schedules, Plan, and Disclosure Statement are all filed at one time. Otherwise, the Petition would be filed, two weeks later the schedules, a few months later the Plan and Disclosure Statement. It's an attempt to get out of Chapter 11 faster.

Just because they filed everything together in no way means it "is not likely to be stopped." Creditors still have to vote on the plan. The judge still has to approve the plan as "fair."


----------



## Rader Sidetrack (Nov 30, 2011)

More on the topic of _prepackaged _Chapter 11 bankruptcies.


> A prepack can have significant advantages over either a traditional chapter 11 case or an out-of-court restructuring, especially for a company that does not need to repair operational problems with the extended use of bankruptcy tools. Unlike a restructuring that takes place fully-out-of-court, a prepack allows a company to minimize the leverage of holdouts and to reach and effectuate an arrangement that satisfies the majority of creditors. Unlike an ordinary chapter 11 case (in which the debtor files, obtains approval of its disclosure statement, solicits votes, and seeks to have the plan confirmed), _a company in a prepackaged chapter 11 case does much of the work before entering the bankruptcy system. *It negotiates and solicits votes on a plan,* then files for bankruptcy with the potentially confirmable plan in hand. _This enables the debtor to confirm a plan and emerge from bankruptcy within a few months or less.
> 
> More at the link:
> 
> http://www.abiworld.org/AM/Template.cfm?Section=Working_Group_Proposals&Template=/CM/ContentDisplay.cfm&ContentID=36465


----------



## Specialkayme (Sep 4, 2005)

Every chapter 11 negotiates and solicits votes in a plan. Most attempt to do this prior to filing bankruptcy. That does not mean it's a "done deal" or that all creditors are already on board. Nothing in that quote said that everyone in a pre-packaged bk is onboard. Nothing in that quote said that creditors did not have to vote on the plan, or that the judge didn't have to approve it.

Thank you for informing a Chapter 11 Bankruptcy Attorney on how it works by searching the internet Rader.


----------



## Rader Sidetrack (Nov 30, 2011)

The quote I linked to above was provided by the American Bankruptcy Institute which says they are: 



> The American Bankruptcy Institute is the largest multi-disciplinary, non-partisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABImembership includes more than *13,000 attorneys, auctioneers, bankers, judges, lenders, professors, turnaround specialists, accountants and other bankruptcy professionals *providing a forum for the exchange of ideas and information. In fulfillment of its mission to provide information to its members, journalists, Congress and the public, ABI is engaged in numerous educational and research activities, as well as the production of a number of publications both for the insolvency practitioner and the public.
> 
> 
> http://www.abiworld.org/AM/Template.cfm?Section=About_ABI


If you are not a member of the ABI, _perhaps _you should be.

My comments included the _qualifiers _"LIKELY" and "GENERALLY", and are of course, _*my opinion*_.

Everyone reading this, including any and all attorneys, are welcome to provide their own differing opinion. _Perhaps your opinion might have more credibility if you provided a link to support your opinion.

_A link to statistics showing the percentage of _prepackaged _Chapter 11 plans that are approved without substantial changes vs non-approved would be a good start, *in my opinion. *

.


----------



## tarheit (Mar 26, 2003)

Apparently their bad business practices extended well beyond importing fake honey. If you end up needing forgiveness of 27 million dollars when you are selling sugar water and cheap laundered honey as real honey then you have a big problem at the core of the business. The 2 million dollar fine was a tiny slap on the wrist and didn't even seem to be as much as they benefited from the criminal activity.

I would be very hesitant selling them any honey in the future... If you don't get paid in cash up front you become a creditor and if the 'reorganization' doesn't work you could end up one of those being paid 10 cents on the dollar.


----------



## coopermaple (Aug 30, 2009)

Over the past several weeks since Groeb filed for bankruptcy I have been getting letters and documents from the lawyers handling the case. Has everyone else been getting these also? Today was a ballot voting to approve/disapprove the reorganization plan.


----------



## beemandan (Dec 5, 2005)

coopermaple said:


> Has everyone else been getting these also?


Yeah...my mailbox has been busy with them. As I've never done business with them in any way, I don't pay any attention to it...haven't even opened the letters.


----------



## Rader Sidetrack (Nov 30, 2011)

Those who didn't get letters may be interested in this article published Nov 11 summarizing the Groeb bankruptcy situation:
http://www.nasdaq.com/article/judge...on-groeb-farms-chapter-11-plan-20131111-00773

Some highlights from the link:


> The bankruptcy-exit plan would enable three private equity firms that extended another $7 million to remain the company's lenders but with new terms that weren't disclosed in court papers. [HIGHLIGHT] Unsecured creditors would recover 10% of the amount they are owed, [/HIGHLIGHT] and the company's current owners--mostly individual investors--would be wiped out.
> 
> The company filed for Chapter 11 protection on Oct. 1, blaming financial troubles that hit after Groeb Farms was accused of buying Chinese honey through other countries to avoid antidumping tariffs imposed by U.S. trade regulators in 2001. The bankruptcy filing halted several lawsuits filed earlier this year by honey producers and distributors that said they were harmed in the scandal.





> The company, based in Onsted, Mich., operates a second processing plant in San Bernardino, Calif., and a testing lab in Belleview, Fla. It [HIGHLIGHT] also owns the Miller's American Honey retail brand [/HIGHLIGHT], which it purchased in 2010 for about $16 million, according to court papers.


According to the article, there will be a hearing December 19th to review the results of the creditor ballot.


----------



## tarheit (Mar 26, 2003)

I've been getting the letters and have never done business with them either. They seem to be casting a wide net just in case. They have listed every possible debt including many that are less than $100. They'll spend more discharging many of the debt than what the amount is.

I do fee sorry for the beekeepers and small businesses on the list that will end up paying for Groeb Farms mistakes and illegal activity.


----------



## Specialkayme (Sep 4, 2005)

Rader Sidetrack said:


> there will be a hearing December 19th to review the results of the creditor ballot.


It's called a confirmation hearing.


----------



## coopermaple (Aug 30, 2009)

I sent in my ballot today. Can't say I'm in favor of seeing them continue. Looks like the little guys aren't going to get back much if anything. Feel a bad for them but I don't see any point in supporting a company that bought that much Chinese honey.


----------



## Rader Sidetrack (Nov 30, 2011)

Specialkayme said:


> It's called a confirmation hearing.


Thanks for the technical clarification.

Any bets on whether this _pre-packaged_ bankruptcy plan will be approved without substantial changes?


----------



## Specialkayme (Sep 4, 2005)

That depends on two things:
1. Will 2/3 of the dollar amount AND 51% of the number of unsecured ballots cast be rejecting the plan?
2. What do you consider "substantial"?

If the answer to 1 is no, then the Plan likely won't change (absent some secured creditor wanting a slightly higher payment). If the answer to 1 is yes, the Plan may change slightly, likely based on the Absolute Priority Rule, requiring new investors to infuse capital to flow to 1) administrative expenses and operational expenses, and 2) unsecured creditors.


----------



## Rader Sidetrack (Nov 30, 2011)

What a surprise ... The Groeb Farms _prepackaged _bankruptcy plan was approved by the court! 


> Judge Walter Shapero of the US Bankruptcy Court in Detroit gave his approval for the restructuring plan of Groeb Farms Inc, The Wall Street Journal reported. The decision will facilitate the Michigan-based honey supplier's emergence from Chapter 11 protection under the ownership of Peak Rock Capital, a private equity firm.Shapero gave the greenlight for the plan on Thursday, December 19 after a confirmation hearing. The decision will enable Texas-based Peak Rock Capital to gain control of the company after it would extend it a bankruptcy loan amounting to $30 million.
> 
> _Read the rest of the article here:
> _http://www.vcpost.com/articles/2005...t-approves-groeb-farms-restructuring-plan.htm




Note that the _Groeb Farms_ name has apparently been deemed irreversibly tainted by the criminal swindle scheme they used, and they are changing the name of the surviving company (to protect the guilty? :scratch:).




> Peak Rock Capital will take control of the former Groeb Farms , now known as Natural American Foods Inc., after extending a $30 million loan to the company, which filed for bankruptcy protection after regulators caught it illegally buying Chinese honey through other countries to avoid antidumping tariffs....
> 
> _You need an account to read the rest of this article:
> _http://pevc.dowjones.com/Article?an...FLBO0020140102ea12js41k&cid=32135028&ctype=ts



The "Natural" in the new name, _Natural American Foods Inc._, is a nice touch. :lookout: No word on whether they have also changed their business _ethics_.

:ws:


----------



## Specialkayme (Sep 4, 2005)

Rader Sidetrack said:


> What a surprise ... The Groeb Farms _prepackaged _bankruptcy plan was approved by the court!


It wasn't approved because it was prepackaged. It was approved because the creditors voted IN FAVOR of it.

The Groeb Farms Chapter 11 Plan had 4 main classes of creditors:

1. Senior Loan Claims - 1 company - 1 voted in favor ($16.5M Debt)
2. Senior Subordinated Note Claims - 7 companies - 4 voted (3 didn't vote) - 4 voted in favor (100% of votes, 100% of debt)
3. Trade Claims - 135 total members - of which 36 voted - 31 in favor (86.11%) - those that voted in favor held 98.94% of the debt of that class
4. General Unsecured Claims (everyone else) - 495 total members - 18 voted, 18 voted in favor (100%) 

The vast majority of creditors voted in favor of the plan. Even the unsecured creditors that got 10% of their claim amount voted FOR getting that type of treatment.

If that's what the creditors wanted, why would the judge stop it?


----------



## Rader Sidetrack (Nov 30, 2011)

I wonder what percentage of _prepackaged _bankcruptcy plans are NOT approved by the court? :scratch:


----------



## Specialkayme (Sep 4, 2005)

The ones that don't comply with the Code or aren't voted in favor of.

You act like the court is some mystical creature that either says "yes" or "no" to a bankruptcy plan, like the great and powerful Oz. Doesn't really work that way. The court just makes sure the provisions of 1129 are satisfied. It's up to the debtor('s attorney) and the creditors(' attorneys) to show that the Plan DOESN'T comply with 1129, or that the creditors don't vote in favor of it.

This plan complies with the law and was voted in favor of by the vast majority of creditors.

Why are you so stuck up on this concept of a "prepackaged" bankruptcy?


----------



## Rader Sidetrack (Nov 30, 2011)

> Why are you so stuck up on this concept of a "prepackaged" bankruptcy?

If that is directed to me, I'm not "stuck up" about any concept of bankruptcy, AFAIK. 

But there is a reason certain bankruptcy cases have "_prepackaged_" plans arranged in advance. My guess is that since a certain level of creditor agreement is required to even get the _prepackaged _plan before the court in the first place, the likelihood that _prepackaged _plans move smoothly through the court and get approved in short order is higher than with a more traditional (non-_prepackaged_) bankruptcy. 

That was my point in post #6, but you seemed to think otherwise. Now that the Groeb _prepackaged _plan has been approved, in this case at least, my point is validated. Of course _that is just my opinion. _


----------



## Specialkayme (Sep 4, 2005)

Whatever.


----------

