Agribusiness Firm Sun World Files for Protection Under Chapter 11
Sun World, the California produce giant that brought consumers the seedless watermelon, has filed for protection from its creditors under Chapter 11 of the U.S. bankruptcy code, the company said Tuesday.
The Bakersfield-based firm--known around the world for its patented fruits and vegetables--filed the petition late Monday in federal court in San Bernardino. Its parent company, Sun World International, also filed for bankruptcy protection.
The privately owned company is the largest U.S. grower and marketer of seedless watermelons and table grapes and the largest U.S. marketer of tangerines and mandarin oranges. It is one of the world’s largest marketers of citrus and California dates.
John P. Brincko, the new chief executive brought in less than three weeks ago to lead the company’s restructuring, blamed Sun World’s problems on heavy debts in farm property and equipment, along with unprofitable crops and money-losing joint ventures.
Brincko is a turnaround specialist who has helped restructure a variety of troubled companies, including Knudsen Foods, Foremost Dairies, Globe Securities Systems and Omni Medical.
He said the bankruptcy petition will allow the company to continue its operations and protect the 1,000 or more growers whose produce is marketed through Sun World. Sun World’s sales in recent years have hovered around $200 million annually for more than 70 varieties of fresh produce.
“The company has essentially been without working capital financing for almost a year,” Brincko said, “which says something for the strength of the company. But you can’t go on that way forever and ever. . . . The filing also enables us to get some financing.”
Brincko said Caisse de Nationale de Credit Agricole, a large French agricultural bank and Sun World’s working capital lender, has agreed to provide interim financing until a new lender can be found. Sun World’s long-term lender, John Hancock, is considering more investment in the restructured company.
Brincko said growers now sending fruit to Sun World--mangoes are currently being harvested--will receive full payments for their shipments, but those awaiting payments for previous shipments, like other creditors, may not be paid in full.
“The big blow will be to the people that were running their product through Sun World,” said David L. Moore, president of the Western Growers Assn. “ . . . Hopefully they will be getting their money.”
Sun World’s products include the seedless watermelon, which the company introduced to spectacular success in 1988; the DiVine ripe tomato; Superior Seedless table grapes, and Black Diamond plums.
The company, with offices and production facilities in the San Joaquin and Coachella valleys and Orange County and marketing throughout the United States and 30 foreign countries, provides jobs for 600 full-time and 4,500 seasonal employees.
