Allens Files For Bankruptcy Protection

by The City Wire Staff ([email protected]) 657 views 

Siloam Springs-based Allens Inc. has filed for Chapter 11 bankruptcy in what appears to be an effort to rescue a company that employs 1,173 and has been in business since 1926.

In the Monday (Oct. 28) filing, officials with the vegetable production, canning and distribution business said the company had between 1,000 and 5,000 creditors, has estimated assets of between $100 million and $500 million, and estimated liabilities of between $100 million and $500 million.

The filing names Jonathan Hickman as the chief restructuring officer during the bankruptcy process. Hickman is employed by New York City-based Alvarez and Marsal. Allens is using the Little Rock-based law firm of Mitchell, Williams, Selig, Gates & Woodyard.

According to the website for New York City-based Alvarez and Marsal, Hickman has more than 18 years of experience in financial restructuring. The companies he has worked with include Fairchild Dornier, Berkline/BenchCraft, TruckPro, Magellan Health Services, Snyders Drug Emporium, EZ Serve Convenience Stores, and SIRVA Relocation.

Following are the top 10 creditors according to Allens’ filing:

• Ball Metal Food Container Corp., Broomfield, Conn. – $46.262 million
• Crown Cork & Seal, Philadelphia – $18.041 million
• Hartung Brothers, Madison, Wisc. – $7.773 million
• Razorback Farms, Springdale – $4.139 million
• Ryder Integrated Logistics, Miami – $3.615 million
• D&E Farms, Spring Grove, Pa. – $1.902 million
• Paramount Farms, Plainfield, Wisc. – $1.727 million
• Worzella & Sons, Plover, Wisc. – $1.216 million
• HC Schmeiding Produce, Springdale – $1.195 million
• Bushman Associations, Wittenberg, Wisc. – $950,779

The creditors list also includes $579,036 to the Benton County Tax Collector.

Ball Corp. was the first creditor on Monday to file a “notice of appearance” request – a move typical of creditors.

Filings in the case also note that of the 1,173 now employed by the company, 766 are hourly and 162 are salaried, with 319 temporary workers hired through staffing agencies. Weekly gross wages to “regular employees” are $774,000, noted the filing. In what is a standard request in a bankruptcy reorganization filing, the company asked the court to authorize paying employees.

“In order to enable the Debtors to maintain morale during this critical time, retain their current Employees, and minimize the personal hardship such Employees may suffer if prepetition Employee Obligations are not paid when due or honored as expected, the Debtors, by this Motion, seek an order of this Court authorizing, but not directing, the Debtors to pay and honor all Employee Obligations and authorizing all banks to honor the Debtors’ prepetition checks or electronic transfers for payment of any of the Employee Obligations,” noted the filing.

As is also typical, the company sought “first day” relief from the court to protect bank accounts, cash management systems and other transactional processes required in the day-to-day management of the company.

ALLENS’ NOTE TO SUPPLIERS
In a statement to suppliers, Allens said the reorganization process may include selling all or a portion of the business.

“In the coming weeks and months, Allens will be taking steps to bolster its financial position. The Company will be exploring strategic alternatives, including a potential sale of all or part of the operating business or emergence from the reorganization process as a financially sound, stand-alone company,” noted the statement.

The supplier note also said it plans to continue operating and paying for services and supplies after the Oct. 28 filing date.

“Importantly, the Company has received a commitment from its first lien lenders for ‘debtor in possession’ financing to support the Company’s continued operations,” Allens noted in the statement.

Continuing, the supplier statement from Allens explained: “We realize that Allens’ decision to reorganize in court may affect you and your business, and we regret any hardship this may present you. We are committed to doing everything possible to continue to work together now and in the future. Allens has a long and proud history, and we believe that the Company will ultimately emerge from the reorganization process as a stronger, more competitive business.”

One supplier who will not stick with Allens is Maysville, Ark., farmer Dave Chamberlain. He has grown beans for Allen’s for 20 years, but there will not be a 21st year.

Chamberlain said this spring he had 82 acres of green beans and Allen’s paid him. This fall he planted 56 acres and an Allens representative said they would pay him, but would leave the beans in the field. Chamberlain has yet to be paid for the 56 acres of beans.

“I have decided to get out of the bean business. It’s just too much uncertainty with that company in the past few years,” he said. “I wish them the best as they try and work through their problems.”

ALLENS HISTORY
According to the company website, Allens is a family-owned vegetable processing company that began as Allen Canning Company in 1926 near Siloam Springs. The company expanded production during World War II, and during the 1970s added several new brands to its portfolio, including Popeye Brand Spinach.

Allens officials made several moves in 2012 to shore up business, including a March 2012 announcement that Allens was selling six frozen vegetable brands to the French company, Bonduelle Group.

The company also announced in early 2012 that the company would move operations and 150 jobs from Van Buren into an Allens canning operation in Siloam Springs. The company’s Van Buren warehouse operation was expected to remain open.

Consolidating the canning operations came more than 30 months after Van Buren operations were expanded. In June 2010 the company announced a more than $20 million expansion that included a $13.5 million investment in the company’s Van Buren operation. The $13.5 million investment in Van Buren expands the company’s capacity to process sweet potatoes.

ALLENS’ STATEMENT ON REORGANIZATION
Allens, Inc. (“Allens” or “the Company”), a national leader in canned and frozen vegetables, today filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of Arkansas. Allens is entering this process with the support of its first and second-lien lenders, and has received a commitment from its first lien lenders for “debtor in possession” financing to support its continued operations.

During the reorganization process, Allens intends to continue to operate the business in the ordinary course, focusing on its core canned vegetable markets. In addition to taking steps to bolster its financial position, the Company will be exploring strategic alternatives, including a potential sale of all or part of the operating business or emergence from the reorganization process as a financially sound, stand-alone company. Allens is also seeking a buyer for its frozen vegetables business in Montezuma, Georgia, which specializes in frozen breaded vegetable products and Southern-style frozen vegetables.

“Allens has a long and proud history and we intend to use the reorganization process to become a stronger, more competitive business,” said Josh Allen, President and Chief Executive Officer of Allens. “We remain firmly committed to serving our customers and providing consumers with great-tasting, affordable and high-quality vegetables. We appreciate the support of our suppliers and the ongoing dedication of our employees, whose hard work is critical to the future of our business.”

Allens has filed various motions with the Court in support of its reorganization, including requesting authorization to continue paying employee wages and providing health care and other benefits. Allens has also asked for authority to continue existing customer programs and intends to pay suppliers for goods and services provided after the filing date of October 28, 2013.

Additional information is available on Allens’ website at www.allens-restructuring.com. Court filings and other documents related to the reorganization proceedings are available on a separate website administered by Allens’ claims agent, Epiq Systems, at http://dm.epiq11.com/AllensVeg.

Alvarez & Marsal is serving as Allens’ Chief Restructuring Officer and Lazard Middle Market is serving as its investment banker. Greenburg Traurig and Mitchell Williams are serving as legal advisors.