UPDATE: Yarnell's Files Chapter 7 Bankruptcy, Says Buyers Are Circling

by Mark Friedman  on Monday, Aug. 29, 2011 11:09 am  

Yarnell Ice Cream Co. of Searcy, which unexpectedly shut its doors in June after nearly 80 years in business, filed for Chapter 7 bankruptcy protection Monday, listing $15.7 million in debts and $8 million in assets.

More: Click here (PDF) to download the full document.

The 178-page bankruptcy filing shows sales climbed to $46.3 million in 2010 from $41.75 million in 2009. Sales so far in 2011 were $24.8 million.

One of Yarnell's biggest creditors is Ronnie Cameron of Little Rock, owed $7.2 million. His claim is partly secured by the company's accounts receivables and inventory. The unsecured portion of Cameron's claim is $3.8 million.

Yarnell's also owes the Arkansas Development Finance Authority $2.1 million, but that debt is secured by Yarnell's equipment. The Arkansas Economic Development Commission is owed $1.9 million. That debt is secured by Yarnell's property.

Unsecured claims include $4.2 million to various companies, with amounts ranging from $3.14 to the Arkansas Democrat-Gazette to $352,892 to Mars Chocolate North America LLC of Hackettstown, N.J.

Yarnell's also owes $225,000 to employees for their unused their vacation days. When the company closed, it left about 200 employees jobless, spurring lawsuits.

The filing also showed that Yarnell's bankruptcy is being handled by attorney Kristen C. Wright of Memphis, who has been paid $225,514 for her legal services so far.

In a news release Monday announcing the Chapter 7 filing, Yarnell's said that since closing, it has been "working to maximize the value of its assets, which included the sale of remaining inventory ... and meeting with potential purchasers."

Arkansas Business reported Aug. 8 that Yarnell's had sold its final inventory to Wal-Mart. The inventory was collateral for Yarnell's bank line of credit, so that's where the proceeds of the sale will go, Gene Eagle, ADFA's vice president of development finance, said at the time.

Yarnell's also said that it "has received offers to purchase the company's assets, including property, the Yarnell's trade name and recipes, and inventory." The company said some of the offers are from entities "that have expressed their desire to recommence manufacturing Yarnell's ice cream in Searcy."

Yarnell's declined to comment further on a possible sale, citing nondisclosure agreements. In July, Arkansas Business reported that "several entities" had expressed interest in acquiring and operating the Searcy plant. Executives with Yarnell's have declined to talk to Arkansas Business about its operations.

On Monday, ADEC spokesman Joe Holmes told the Associated Press that a variety of deals have been proposed and that the state is working with the bankruptcy trustee to try to reach a quick resolution. Holmes did not go into specifics about the proposals.

"There has been a lot of activity the past several weeks working with various offers to buy the company," Holmes said.

In a news release on June 30 announcing the closing, Yarnell's CEO Christina Yarnell said the company had "examined many possible avenues to keep the company afloat - actively marketing the company to investors and strategic buyers - the majority of whom are undergoing the same financial distress we are.

"However, we've been unable to obtain additional financing from our lenders or locate a buyer, and have come to the difficult decision that the appropriate course of action is to shut our doors," she said.

 

 

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