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Former Allens claimant’s $3.5 million payment, sanctions motion denied
By Caroline Salls
Pittsburgh, Aug. 28 – Veg Liquidation Inc., formerly Allens, Inc., claimant Hartung Brothers, Inc.’s motion asking the U.S. Bankruptcy Court for the Western District of Arkansas to order the company to pay $3.5 million and to sanction the Veg Liquidation debtors’ counsel for delaying payment of a Perishable Agricultural Commodities Act (PACA) trust claim was denied, according to an order filed Thursday.
As previously reported, Hartung said the company’s counsel delayed payment of the claim by filing an “unwarranted and frivolous objection.”
Hartung said it filed an $8.17 million PACA claim on Dec. 23, 2013.
Veg Liquidation’s counsel objected to about 95% of all PACA claims in January 2014. Hartung said one part of that objection covered the full amount of its claim against the company, with the counsel claiming that Hartung overcharged the debtors for expenses “to secure a secret profit.”
Hartung said it had a valid claim of at least $3.5 million since the start of Veg Liquidation’s case. Hartung said the company’s counsel now admits that the claim should have been paid no later than Feb. 12, 2014.
In addition, Hartung said counsel intended to withdraw a portion of the objection alleging that the creditor breached a fiduciary duty to the company by obtaining a secret profit, but the objection was not withdrawn.
In addition to the claim amount and sanctions, Hartung was seeking payment of 10% interest on its claim and attorneys’ fees.
Allens, a Siloam Springs, Ark., canned and frozen vegetable company, filed bankruptcy on Oct. 28, 2013. The Chapter 11 case number is 13-73597.
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