ORANGE COUNTY IN BANKRUPTCY : Some Vendors Tighten Credit or Demand Advance Payment : Finance: O.C. purchasing officials assess which suppliers are to receive priority with the county’s remaining cash.


Worried about whether they will be paid while Orange County struggles through bankruptcy, some businesses have stopped shipments of goods to the county’s agencies or are demanding payment in advance.

Tom Serrato, president of Far West Meats in Highland, near San Bernardino, said his company--one of several meat suppliers to the county--has ceased shipments to the county’s jails. They had been averaging about $6,000 a week.

“They want us to continue to deliver, but we’re supposed to call on a day-to-day basis to see if we’re going to be paid. So as far as I’m concerned, we’re not going to deliver,” Serrato said.


“When the prisoners start starving, then they’ll probably start calling to say they’ll buy COD,” he said.

Other vendors of food to the county’s jails said they would continue shipments and that they did not expect there would be food shortages for the county’s roughly 4,700 prisoners, split between five different facilities.

Some smaller vendors said they would be willing to do small jobs on a credit basis but would want cash for significant work. “If it were a valve (repair) on a fire engine, we’d probably do it. But if they needed an engine, we’d want to know how we’re going to be paid on it,” said Jack Devine, owner of Associated Diesel Service and Equipment Co. in Wilmington.

Orange County owes his company about $13,000 for work on a sanitation truck, Devine said. “I’m not that concerned about it for our direct contracts, but I have concerns because of the trickle-down effect,” he said. “We do business with a number of contractors, and if all of a sudden they have a lot of money due from the county and they’re not going to get it, that would affect us.”

Phil Fry, manager of Mini Blind Laundry, in Santa Ana, said the county owes him about $3,100 for maintenance work the company completed recently. “It’s not something we care to absorb,” he said. “If the county asked us to do some more work, we’d probably do it if it were a repair situation. But if it were something new, where it was a cash outlay, then we’d probably have to ask for cash.”

Michael Kolodisner, director of the county’s purchasing department, said his office is only beginning to survey which vendors and which departments should be given priority as the county studies how to manage its remaining cash.


“We’re sorting through what everybody needs, and we have to make sure we’re spending on the most critical ones first,” he said.

Food for the county’s jails and fuel for emergency and sanitation fleets are the two most significant items that the county will probably seek to protect from interruption, purchasing officials said.

Executives at the county’s three main fuel supply companies said they have been given assurances that they will be paid out of funds that will not require Bankruptcy Court approval.

“We’re continuing to provide fuel after the bankruptcy, on the understanding that it’s an administrative claim, so that current deliveries are paid out of administrative cash,” said Fred Whitaker, general counsel for Southern Counties Oil Co. in Orange, to which the county has paid $1.37 million for fuel so far this year, according to records from the county’s General Services Agency.

Whitaker said shipments to area cities were being made on a “day-by-day” basis, however.

George Hopwood, government sales manager at General Petroleum, said his company decided Monday that the assurances were strong enough to continue selling to the county without asking for payment upfront.

“We were talking last week about looking for some other arrangement with the county, but we thought it was really vital that we continue deliveries.”


Not all vendors contacted said they are worried about the county’s ability to pay. Joe Stidman, president of Heartland Meats Inc. in National City, said he expects to continue his shipments to the county’s jails, which total about $1 million a year.

“We have a lot of products in inventory, so the (bankruptcy) doesn’t seem to be too much of a concern,” he said. “I don’t think we’ll not get paid . . . but it’s new to us, too. We’ll see how it goes.”