Tuesday, April 21, 2009

Humboldt Creamery files for bankruptcy

According to tomorrows Times-Standard.

Humboldt Creamery has filed for Chapter 11 bankruptcy protection in San Francisco today.


Old Glory Radio said...

This is really so sad, my wife and I had to sell off our property in other states and were gone for a couple of years recently and we would always talk about the Humboldt creamery butter and milk. We walked into a store up in Wa state and there it was...for a month anyway and we ate it all up. To us it was the taste of humboldt and a bit of home. What a shame that one person could do this to such a cultural part of the county. I hope your news team is all over this.

Tom Sebourn said...

The Triplicate up in Crescent City had some good info on where this currently stands.

Humboldt Creamery filing for bankruptcy
Written by Kelley Atherton, The Triplicate April 22, 2009 08:31 am
Business owes Rumiano Cheese $1 millon-plus

After months of uncertainty about Humboldt Creamery’s finances, the Fortuna-based company filed for Chapter 11 bankruptcy protection in federal court Tuesday.

Its creditors include Rumiano Cheese Company, which is owed more than $1 million.

Humboldt Creamery has been trying to straighten out its finances since former-CEO Rich Ghilarducci unexpectedly resigned in February.

“The bankruptcy filing was necessitated by its impaired financial condition,” a press release from the company stated.
In the bankruptcy documents, Humboldt Creamery stated it had 1,000 to 5,000 creditors, assets of $50 million to $100 million, and liabilities of the same amount.

Len Mayer, who was named CEO of the company, said in the press release that Humboldt Creamery is looking for a buyer and has negotiated a loan agreement for $3 million with its lenders, CoBank and American AgCredit.

“This loan agreement will allow us to pay on a current basis all of our suppliers for goods, supplies and services delivered to us after the filing of the bankruptcy case,” Mayer said in the statement, “and to at the same time find a strategic buyer who can continue the operations of this business that was started in 1929.”
Humboldt Creamery is a cooperative of 50 dairies with facilities in Fernbridge, Stockton and Los Angeles. The creamery sells milk, powered milk, ice cream and other frozen treats.

Its business stretches up to Del Norte by way of Alexandre EcoDairy Farms and Rumiano Cheese Company. In court documents, Rumiano Cheese is listed as a “unsecured creditor” that is owed more than $1.1 million. In the same documents, Humboldt Creamery estimates it will have the funds to pay back those unsecured creditors.

Rumiano Cheese owner Baird Rumiano said Tuesday he thinks the amount owed to him by Humboldt Creamery for the organic milk sold to the company is more than that.

“I don’t know where they got that figure,” he said.

Rumiano said payments for the milk from the family-owned company’s dairies eventually stopped.

“They were slowly paying and slowly paying and then it just stopped,” he said.

Rumiano said he is still receiving payments for the milk the company hauls between Alexandre Farms and Fernbridge, where Humboldt Creamery’s plant is located.

Yet the relationship with the creamery has been strained, he said,

“I will continue to buy milk from them, but I won’t sell them any milk,” Rumiano said about how the relationship between the two dairy retailers has changed.

Alexandre Eco-Dairy officials could not be reached for comment Tuesday.

The New York Times reported March 26 that then-Humboldt Creamery CEO Rich Ghilarducci left for business in San Francisco and basically never returned. His lawyer called the company to say Ghilarducci’s resignation was on the way and there could be some problems with the creamery’s financial statements.

The Eureka Times-Standard reported that Ghilarducci allegedly manipulated financial data and reporting by overstating inventory levels, overstating accounts receivable and understating accounts payable.

The U.S. Securities and Exchange Commission, FBI and U.S. Department of Justice are investigating the situation.

As a result, payments to milk producers were deferred. The company also decided to sell its Los Angeles ice cream plant.

Last week, the Humboldt County Board of Supervisors decided to apply for a Community Development Block Grant for up to $5 million that it would loan to Humboldt Creamery.

Now the creamery is trying to figure out if the books were cooked and how to become a viable company again. Bankruptcy would buy the company time to find a buyer or new partner, time to pay off its debts or have some erased.

The filing was made in U.S. Bankruptcy Court in Santa Rosa.

“Humboldt (Creamery) expects to find a new partner who will work with it to continue the business and solve the problems caused by the former lack of financial reporting,” the press release from the company stated. 

“The reorganization will be for the benefit of the employees, local dairy farmers, and creditors and suppliers of the company.”

Baird Rumiano said he doesn’t think Humboldt Creamery will go out of business, and added it would be “catastrophic” for Humboldt County if it did. All those dairies would have to find someone else to sell milk to, which could mean shipping it farther away, he said.

Whether Humboldt Creamery stays in business or not, Rumiano said his 90-year-old cheese company is sound.

“We have a good milk supply,” he said. “I”m not worried about that. It’s business as usual for us.”

Humboldt Creamery’s financial mess still “hurts” though, Rumiano added, but others have been affected a lot more.

“We’re a solid company,” he said. “We’re not going anywhere.”

Subscribe to the Baker City Herald, 5-days a week, for only $7.75 per week. Or call 1-541-523-3673.

Old Glory Radio said...

Thanks Tom, I don't know why this one bothers me as much as it does. I think all of us take the drive to Ferndale here and there and point out the windowns as the Humb. Creamery cows...probably not the real cows, but it doesn't matter...it is just such a part of this place, I hope they nail this guy up. But, to bring politics into it.....it depends on who he was funding in campaigns doesn't it. Always follow the money.