Former NORPAC farmers could receive some back money under settlement
Since NORPAC filed for bankruptcy a year ago, the farmers who owned the vegetable processing co-op feared they would never be paid for the crops they previously delivered to the company.
But the company has reached a settlement that could allow it to repay some of the money owed to its over 100 former owners.
Specifics of the agreement were not announced, but the co-op and its unsecured creditors told bankruptcy Judge Peter McKittrick they have reached an agreement, though it will have to be signed by most of the farmers.
Much of the $156 million the parts of the former company were sold for is due to creditors with secured claims, but the farmers will now be able to collect some of the millions left.
“The debtor has a fiduciary duty to the unsecured creditors in the estate,” McKittrick said.
Co-op's road to bankruptcy
What started as Stayton Canning Company in 1924 grew over the years to one of the largest vegetable processors in Oregon.
Citing mounting debts, the vegetable processing co-op filed for Chapter 11 bankruptcy protection in August 2019.
It sold its Quincy, Wash., processing facility, trademarks and inventory for $107 million to a company owned by farm entrepreneur Frank Tiegs, and then sold the Salem, Brooks and Stayton processing facilities for $49 million, with Tiegs eventually buying the Salem and Stayton facilities.
Closure:NORPAC layoffs climb to 1,447 with impending closure of Salem corporate office
But CoBank, which financed the bankruptcy, had a secured claim for $125 million, and was the first to be paid. Others with secured claims also have been paid.
NORPAC has been settling with other companies for reduced amounts, including H.M. Clause, which settled for $1.1 million in June against its $1.9 million in claims and one in July with Seminis Vegetable Seed, which will receive $340,000 against $973,000 in claims.
Settlement needs to be approved
In most years, the farmer-owners of NORPAC received a portion of the companies’ profits.
While NORPAC was in the early stages of bankruptcy starting in August, farmers – including those who owned a part of the co-op – continued to deliver their vegetables to the processor with the promise of being paid.
NORPAC filed earlier this year against member farms that demanded payments for crops delivered in 2019, arguing they weren’t entitled to money.
Sale:Leading cold storage company purchases NORPAC's Salem, Stayton and Brooks plants
A group of unsecured creditors banded together to seek $16 million from the member growers.
But the proposed settlement would instead let them be paid.
The settlement has to be signed by 85% of the farmers to be approved.
It must be submitted Aug. 18 and a hearing approving the deal is set for Sept. 11.
Settling suit with new owner
In a separate suit, the company that purchased the majority of the assets of NORPAC settled its suit for overpaying for products the company had in its possession at the time of the sale.
The Frank Tiegs-owned Oregon Potato Company purchased NORPAC’s Quincy, Wash., processing plants and the fruits and vegetables in its possession in December 2019 for $107 million.
But it alleged it overpaid by $7.1 million for the value of products the company said it had on hand.
In its Aug. 3 settlement, the company agreed to settle for the $2 million in the true-up escrow account.
That agreement also settled a potential lawsuit against Tiegs concerning his termination of an earlier agreement to purchase NORPAC’s assets.
The company called North Pacific Canners & Packers has consolidated the former NORPAC processing operations at the Brooks facility.