Lawyers for Salyer American Fresh Foods in Salinas, CA, were expected to be in court June 5 to ask the judge to remove the court-appointed receiver that has been running the firm for the past month.
In early May, Steve Franson, the receiver, took control of the grower-shipper operation, which owed lenders more than $34 million and had informed its growers to quit planting crops for future harvest. At the time, Salyer American reportedly agreed to the appointment, but it has since had a change of heart.
When Mr. Franson was named the receiver, Salyer American officials continued to publicly suggest that the company would emerge from its financial difficulties and continue operating. However, two weeks into his tenure, Mr. Franson announced the inability to secure additional financing and began shutting the firm down.
Salyer American told its growers in mid-May that it would no longer harvest or sell their products, and the Salinas shipping operation closed before the end of the month. Sixty full-time employees and hundreds of seasonal workers were laid off. Salyer American is still apparently harvesting and selling celery from its Oxnard facility, but officials have said that this operation will also be shut down in the coming weeks.
According to a June 3 story in the Monterey Herald, Salyer American officials have taken this unusual action of trying to remove the receiver because company officials believe Mr. Franson has shown bias against the firm.
"He has not conducted himself appropriately as a receiver. He has acted in disregard of the proper interests of the employees," Donald Putterman, attorney for Salyer American, was quoted as saying in the Herald.
According to the Herald, Mr. Franson and Salyer American officials and employees, including company owner Scott Salyer, have a bad relationship and have exchanged nasty e-mails since he took over. The Herald quoted an attorney representing Mr. Franson as saying that friction is expected in the situation because a receiver is in somewhat of an adversarial role with the company.
The Herald reported that the court documents highlight the financial difficulties Salyer American was having. The company was reportedly $3 million in the red, had a growing negative cash flow, and was on pace to lose more than the $7.8 million it lost in 2008.
The court documents also revealed intercompany transfers made around Dec. 31, 2008. According to the Herald, $13.8 million in intercompany transfers went to SS Farms, another company owned by Scott Salyer, for "prepaid expenses." Another $2.9 million went to "related party payments," and $500,000 went to Mr. Salyer personally. A Salyer American spokesperson told the newspaper that there was nothing out of the ordinary with those transfers.
Neither Mr. Putterman nor other Salyer American officials were available to comment on this story by press time for The Produce News' June 8 issue .