U.S. Bankruptcy Court Approves SK Foods LiquidationOn September 16, 2014 by Schnader in Litigation
SAN FRANCISCO – On September 16, 2014, the United States Bankruptcy Court for the Eastern District of California confirmed the joint plan of liquidation in the substantively consolidated cases of SK Foods, LP and several affiliates.
Prior to bankruptcy, SK Foods was the second largest processor of tomato and other vegetable products in the United States. In 2008, former controlling equity holder Scott Salyer and several other high ranking officials in the company were accused of participating in a scheme to bribe customers in order to win contracts, as well as selling fraudulently mislabeled products. They allegedly also sought to obtain confidential information about their competitors and conspired with other tomato processors by fixing prices and allocating market shares, in violation of federal anti-trust laws.
The allegations of criminal wrongdoing resulted in the appointment of Bradley S. Sharp of Development Specialists, Inc. to serve as the Chapter 11 trustee less than two weeks after the cases were filed. Following his appointment, the Trustee sold the Debtors’ processing plants to an affiliate of Olam International, and pursued litigation against Salyer and several non-debtor affiliates Salyer controlled, in order to recover assets for creditors. Over the course of the case, the Trustee also negotiated settlements with the major creditor constituencies that became the foundation for the liquidating plan. The Trustee, the Official Committee of Unsecured Creditors, and Bank of Montreal, agent for the Debtors’ pre-petition lenders, proposed the plan, and the representatives of the anti-trust victims filed a statement in support of the plan.
The plan was overwhelmingly accepted by holders of impaired general unsecured claims, with 98.88 percent of creditors holding $124.3 million in claims voting in favor of the plan, and only one creditor holding a claim for $42.36 voting against the plan. At the confirmation hearing for the plan, the Court complimented the parties on having brought what it characterized as a “long and difficult” case to conclusion.
In In re SK Foods, LP, et al, Case No. 09-29162, Mr. Sharp is represented by Schnader Harrison Segal & Lewis LLP. The Official Committee of Unsecured Creditors is represented by Downey Brown LLP. Chapman & Cutler LLP represents the Bank of Montreal, and the four classes of anti-trust victims are represented by Quinn Emanuel Urquhart & Sullivan, LLP.
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