California Produce Company in Chapter 7 Bankruptcy
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California Produce Company in Chapter 7 Bankruptcy

November 24, 2011

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A federal bankruptcyjudge in California has approved a federal trustee’s request to force Cimio Bros. Produce into Chapter 7 bankruptcy protection, according to ThePacker.com.

The company reportedly filed for Chapter 11 bankruptcy in 2009 to reorganize its debts but has since been unable to meet financial obligations.

This summer, it seems Cimio Bros. missed a July 31 deadline for filing reports with the bankruptcy court and submitting a quarterly payment of $6,500. Shortly thereafter, the bankruptcy attorneys working on the case submitted an application to withdraw from the case because the company had not managed to pay its legal fees.

A federal trustee then requested that the Cimio Bros. case be converted to a Chapter 7 liquidation. The judge approved the attorneys’ request and the conversion. During the Chapter 7 bankruptcy, the trustee will liquidate the company’s assets, distribute any profits among creditors, and look for other potential revenue channels.

Earlier Bankruptcy Efforts

Cimio Bros. Produce apparently first encountered financial trouble when a $6.5 million loan came due to Wells Fargo in 2009. When the company was unable to pay, the bank reportedly seized its bank account, prompting the Chapter 11 bankruptcy filing.

In an attempt to lower costs and reorganize during Chapter 11, Cimio Bros. reportedly cut salaries for its 24 employees by a total of $20,000. The move, though, has proven insufficient to correct the company’s financial woes.

At present, it seems investigators are attempting to discover what went wrong with Cimio Bros., exploring whether or not company money might have made its way into the wrong hands. At present, no evidence suggests that the company is responsible for any such wrongdoing, but apparently such investigations are simply part of the bankruptcy process.

In its Chapter 7 bankruptcy filing papers, Cimio Bros. Produce listed between $10 and $50 million in debts and assets in the same range.

Bankruptcy without a Lawyer “Unusual”

Sources familiar with the Cimio Bros. Chapter 7 case have noted that going through Chapter 7 bankruptcy without a lawyer is highly unusual, especially for a business. Whether or not the business is able to find legal help given its record of nonpayment remains to be seen.


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