By Robin Fornoff
CMI projects editor
Assets of defunct peanut giant Sunland Inc. of Portales will be sold to a California manufacturer for $18.5 million if the court-appointed bankruptcy trustee gets his way.
Trustee Clarke Coll has asked federal bankruptcy court in Albuquerque to approve the sale of Sunland to Ready Roast Nut Co. in Hughson, Calif. In his Jan. 31 court filing, Coll’s attorneys said Ready Roast’s was the “highest and best of the proposals” received for Sunland’s assets, including the property in Portales.
Sunland’s attorneys had estimated the bankrupt firm’s assets at close to $50 million in earlier court filings. Lawyers for Sunland’s three major secured creditors — CoBank, Production Credit Association (PCA) and Costco — have all said they feared Sunland was over-estimating its value.
It was not clear in Coll’s request if Ready Roast planned to re-open the Sunland plant in Portales. Telephone calls to Ready Roast and Sunland’s Chapter 7 bankruptcy attorney William Arland were not immediately returned.
Coll’s request said Ready Roast has signed a purchase agreement. Coll also said Sunland still owes CoBank and PCA at least $14 million.
In late December, U.S. Bankruptcy Judge David Thuma granted Costco’s request to retrieve an estimated $12.5 million worth of peanuts it purchased to help then-cash strapped Sunland fulfill its peanut butter contracts. Sunland’s products were directly linked to a nationwide Salmonella poisoning, prompting a federally mandated shutdown. The peanuts remained in storage at facilities across eastern New Mexico and West Texas since Sunland filed for bankruptcy protection last October.
Under terms of the proposed sale, it is likely to pay off all the secured creditors.
However, hundreds more small growers and suppliers will likely wind up having to settle for pennies on the dollar for what they are owed.
Included in the proposal is a 3 percent or $500,000 “break up fee,” Coll’s attorneys describe as a “Reasonable amount … for the substantial time and effort it (Ready Roast) has invested and the risks it has assumed…”
Ready Roast, according to its website, has been in business since 2006 and produces “large volumes of oil and dry roasted nuts for the dairy and other food processing industries.”