A US Bankruptcy Court approves honey supplier Groeb Farms Inc to proceed with its restructuring plan
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.
Last month, Shapero cleared the creditors of Groeb Farms to vote on the plan, Dow Jones Newswires reported. He said that the description of the company's exit plan was enough for the creditors to vote on it. This included vendors that Groeb owed $14.5 million to and who are scheduled to get back 10% of their claims.
In that report, the $30 million loan from Peak Rock Capital would enable the honey supplier to pay off the remaining balance on a $25 million loan which Peak Rock Capital obtained from Wells Fargo Bank as well as to give money for Groeb Farms to continue operations while the bankruptcy case is going on. The exit plan would also allow three private equity companies that have given another $7 million to remain as the lenders of Groeb but under new terms that were not disclosed. Around 10% of the amount owed will be recovered by unsecured creditors but most of the individual investors would be wiped out, the report said.
Groeb Farms filed for Chapter 11 bankruptcy in October after allegedly purchasing Chinese honey through other countries so it would not have to pay antidumping tariffs. US trade regulators imposed tariffs on China in 2001 after determining that producers of honey in China were selling their products at prices which were unfairly low.