Firms Had Sought to Put Chain Into Bankruptcy : Heidi’s Reaches a Settlement With 3 Creditors

Heidi’s Frogen Yozurt Shoppes Inc. has quietly settled its differences with three creditors who last week filed papers to put the troubled chain into involuntary bankruptcy.

Terms of the settlement were not disclosed. But at least one of the creditors, the Paper Co. of Anaheim, should eventually receive all of the $18,655 it is owed for bags, cups and other paper supplies, the company’s president, Mike Madden, said Monday.

The other two creditors are Southwest Traders Inc, a Temecula distributor that said it is owed $51.634 for yogurt, toppings and juices that it delivered to Heidi’s, and Superior Electrical Advertising Inc. of Long Beach, which wants $35,786 for signs at Heidi’s stores.

Company founder Heidi Miller confirmed the settlement and said the creditors will receive about 15 cents for every $1 they are owed. She said she didn’t know whether the Paper Co. would receive all of its money over time.

In papers filed Feb. 6 in U.S. Bankruptcy Court in Santa Ana, the three creditors contended that they were never paid for merchandise or services provided to the Laguna Hills dessert chain or to its handful of company-owned stores. They filed an involuntary bankruptcy petition under Chapter 7 of the U.S. Bankruptcy Code.

But within hours of the filing, executives with Steve’s Homemade Ice Cream of New Yorkhad stated publicly that a settlement was in the works. Steve’s has agreed to purchase the 86% of Heidi’s that is owned by founder Heidi Miller and Executive Vice President Brian Pallas.

“The (bankruptcy) judge has to accept their offer,” said Jeff Stern, who heads Superior Electrical. “But I’ve negotiated with them, and as long as they’re doing things by the book, I’ll settle.” He would not elaborate.

Madden said he is “real satisfied” with the agreement. “I’m getting all my money,” although not in a lump sum.

Madden said his company is the only one of the three that filed the bankruptcy petition that will not continue to do business with Heidi’s.

The owner of Southwest Traders, Ken Smith, said last week that Heidi’s had terminated his agreement to supply products to the chain. But according to Madden, Southwest Traders has reached a new agreement and will continue to supply yogurt and toppings and begin supplying paper products to Heidi’s.

Smith could not be reached for comment.