Sunland may reopen on a limited basis

By Robin Fornoff

CMI PROJECTS EDITOR

rfornoff@cnjonline.com

Shuttered peanut processor Sunland Inc. of Portales could be opening its doors for business on a limited basis under an order issued Wednesday by U.S. Bankruptcy Court Judge David Thuma.

Thuma granted Trustee Clarke Coll’s request to open Sunland for at least the next 12 months, pending the sale of assets.

Under the order, Coll is authorized to hire employees for delivery of customer inventory left on the plant’s floor when Sunland unexpectedly shut down operations Oct. 8 and filed for Chapter 7 bankruptcy protection.

It isn’t clear how many employees Coll might hire to assist in getting the inventory to Sunland customers and keep up equipment.

Coll’s attorney Thomas Walker of Albuquerque didn’t immediately return telephone calls.

Sunland’s attorney William Arland III of Santa Fe said he had no direct knowledge of Coll’s plans but speculated Sunland would likely be operating “with something like a skeleton crew.”

Much of the equipment at Sunland is new, purchased within the last year to comply with a federal order that shut down the plant for months after its products were linked to a nationwide salmonella scare.

Thuma’s order specifies Coll “is authorized to operate the Debtor’s (Sunland’s) business in a limited capacity” and “shall not extend to the processing of peanuts or peanut products.”

The estimated $20 million worth of peanuts Sunland has in storage are the focus of a legal fight among Costco, Coll and two of Sunland’s other largest creditors, CoBank and Production Credit Association of Southwest New Mexico.

Costco, which fronted Sunland the cash to purchase the peanuts, has asked the judge to release them, thus excluding the peanuts from the asset sale. Coll is opposed to releasing the peanuts to Costco, claiming the retail giant owes Sunland about $4 million for peanut butter it processed as part of a contract Costco canceled, forcing the bankruptcy.

Thuma has set a Dec. 23 hearing to resolve the issue.

Arland said Coll is in full control of operations at Sunland under bankruptcy court rules. Specifics of the judge’s order direct the trustee to:

• Operate the business in a limited capacity.

• Identify, preserve and protect assets and records.

• Invoice customers for products and customer-reimbursable expenses.

• Handle all aspects of management of Sunland’s premises, including without limitation, paying reasonable expenses for such things as utilities.

• Engage employees to assist him in carrying out his duties.

• Enter into contracts and agreements the trustee determines are necessary to preserve and protect the estate.

• Operations shall not extend to the processing of peanuts or peanut products.

• Withhold income, Social Security and other taxes from wages paid any employees.

• File periodic reports of the operation as a business.

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