MANATEE -- A Wauchula-based tomato farm with land holdings in three Florida counties has filed for bankruptcy as it grapples with more than $27 million in unpaid debt.
Grainger Farms Inc. and four related companies filed Chapter 11 documents with the Tampa division of the U.S. Bankruptcy Court on May 6. The companies are all controlled by James R. Grainger, who controls a 50-percent stake in the packaging side of Palmetto tomato packing company Taylor & Fulton.
Taylor & Fulton is not a subject of the bankruptcy.
The filing attributes the companies' cash crunch to a tomato market that has seen prices fall precipitously since 2010.
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A U.S. Department of Agriculture report shows how volatile the tomato market can be. In January 2010, a 25-pound box of top-grade tomatoes sold for $21.95. One year later, the price had dropped by 36 percent to $13.95.
As of May 7, the price was
$7.95 and the demand was "fairly light" with an "about steady" market, according to the report.
Creditors, primarily lending institutions and suppliers, are seeking to recover funds extended to the Grainger companies in the forms of mortgages, credit for equipment and other financial considerations, court documents show. The companies failed to pay more than $131,000 to its approximately 250 employees. On top of the unpaid wages, the debtor companies owe more than $72,000 in payroll taxes.
The companies' filing with the court lays out its financial position to repay those debts. A Chapter 11 bankruptcy is undertaken to protect a working business from creditors to allow the business to continue operations.
In the filing, the Grainger companies asked the bankruptcy court to allow it to use the cash collateral it has to continue to pay operating expenses. Cash collateral is money earned on selling liquid assets in the course of a bankruptcy.
The Grainger companies would use the money to maintain its property and business, rather than to pay debts.
"Indeed, it is in the best interests of all creditors and the Debtors that the Debtors use their cash collateral since such usage will preserve the value of any secured party's collateral," states a filing submitted by Grainger attorney Scott Stichter of Tampa.
Stichter's office, which also represents the owner of the fertilizer-contaminated Piney Point land in north Manatee County, did not respond to a request for comment on the bankruptcy. Grainger also failed to respond to multiple requests for comment.
Court papers show the Grainger companies earned about $23 million in revenues in 2014 from tomato, citrus and cattle farming. The farm operations produced more than 2 million boxes of tomatoes that year.
The companies also owned about $30 million in assets as of the end of 2014. Included in those assets were approximately 5,000 acres of farm land in Collier, Hendry and Manatee counties.
A Grainger subsidiary sold off 990 acres near Wauchula on April 16, garnering a $6.8 million payday from a Boston agricultural investment group. That land secured a $7.4 million mortgage extended by a Palmetto company operated by former Taylor & Fulton owners John and R. Jay Taylor.
County records show that Grainger still owns more than 1,700 acres in the same area.
Other large-scale creditors named in the bankruptcy documents include the Metropolitan Life Insurance Company of New Jersey and St. Louis-based Rabo Agrifinance. The Grainger companies owe those lenders a combined $24.6 million secured by the debtors' real and personal property.
Coming back from a heavy debt position is likely to be a challenge based on current conditions of the tomato market. Growers throughout the county have taken hits as prices have dropped, said Gary Reeder, president of the Manatee County Farm Bureau and a tomato farmer himself. Not all producers have been able to stay in operation.
"The tomato business is a tough business to be in," Reeder said. "The strong survive and the weaker ones go by the wayside."
A hearing to secure an emergency order for the Grainger companies to use its cash collateral was held Thursday in Tampa. The next step for the case will be a preliminary hearing on May 20 to be held in Courtroom 8A of the U.S. District Courthouse in Tampa at 801 North Florida Ave. The hearing begins at 11 a.m.
Matt M. Johnson, Herald business reporter, can be reached at 941-745-7027, or on Twitter @MattAtBradenton.
Janelle O'Dea, Herald business reporter, can be reached at 941-745-7095, or on Twitter @jayoday.