East Coast Brokers proposes settlement on IRS claims of $48 million

By Kali Hays

New York, July 10 – East Coast Brokers & Packers, Inc.’s Chapter 11 trustee, Gerald A. McHale, Jr., is seeking court approval of a settlement reached between the company, its subsidiaries and the Internal Revenue Service resolving $48.87 million of claims, according to a Thursday motion with the U.S. Bankruptcy Court for the Middle District of Florida.

The IRS claims are a result of the company failing to file tax returns for 2012 and 2013 and allegedly under-reporting its tax liabilities for the 2007 through 2010 tax years.

According to the motion, there are 32 tax returns that the company has failed to file but, “given the poor condition of the debtors’ books and records, the preparation and filing of accurate tax returns would be extremely costly and time consuming.”

Under the terms of the settlement, the IRS will not require the company to file any outstanding tax returns and it will be allowed a secured claim in the amount of $3.9 million and a priority claim in the amount of $39.44 million to be paid after the allowed administrative expenses by distribution of 50% of the cash on hand from the East Coast Brokers and each of its subsidiaries.

The remaining 50% of cash on hand will be reserved for distribution to holders of all other general unsecured claims, excluding those of the IRS, according to the motion.

Mulberry, Fla.-based former tomato grower-shipper East Coast Brokers & Packers filed bankruptcy on March 6, 2013 under Chapter 11 case number 13-02894.

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