Judge Rules Allens Inc. Must Pay $2M Claim

A U.S. District Bankruptcy Court judge ruled on Wednesday that the defunct Allens Inc. of Siloam Springs has to pay a claim totaling $2.25 million to D&E Farms Inc. of Spring Grove, Pennsylvania.

Allens had objected to D&E Farms’ $2 million claim on several grounds including that D&E added freight and fuel charges in its Perishable Agricultural Commodities Act claim which violated a section of the PACA regulation.

Bankruptcy Court Judge Ben Barry ruled in favor of D&E Farms.

"The statute clearly expresses Congress' intent to pay in full all sums owing in connection with a PACA transaction to all unpaid suppliers or sellers of perishable agricultural commodities," Barry wrote in his order on July 30.

The total amount owed to D&E Farms is about $2.25 million after interest and attorneys’ fees are added.

The ruling could mean more bad news for Allens.

"The reasoning that the judge relied on to decide D&E Farms’ claims would be relevant in at least two other claims," said attorney Greg Brown of New York, who is an attorney for D&E Farms.

Those claims total about $10 million, he said.

Attorney Jason Klinowski of Chicago, who represented Allens, said his client is still examining the Barry’s order and no decision has been made to appeal it.

Allens filed for Chapter 11 bankruptcy protection in October and its case was converted to a Chapter 7 liquidation.

In February, Sager Creek Acquisition Corp., a newly formed entity owned by investment funds managed or advised by Sankaty Advisors LLC and GB Credit Partners LLC, bought Allens at a bankruptcy auction in a deal valued at $160 million.

In bankruptcy filings, though, Allens cited nearly $290 million in debt and $295 million in assets.