SALEM, Ore. (AP) — A bankruptcy judge has approved a settlement agreement between the former NORPAC Foods processing company and some 100 member farms, which means they’ll collectively receive $4.5 million.
Continued litigation between the defunct food processor and growers would have been highly complex and could have derailed the current bankruptcy process, the Capital Press reported.
U.S. Bankruptcy Judge Peter McKittrick said during a Friday court hearing that the court appreciates the work that went into the settlement.
Settlements have been reached in almost all the major lawsuits involving the cooperative, which is now called North Pacific Canners & Packers after selling its name and intellectual property.
Earlier this year, the judge warned attorneys that NORPAC’s bankruptcy was turning into a “big pile of litigation” that could lead to “fighting over an administratively insolvent estate if we’re not careful.”
If the deal between farmers and the cooperative had collapsed, it likely would have forced the bankruptcy to convert from a Chapter 11 debt restructuring into a more time-consuming Chapter 7 dissolution, according to Albert Kennedy, lawyer for NORPAC.
In that case, it would have meant the end for the cooperative’s proposed bankruptcy plan, under which $28 million would be distributed to unsecured creditors who’d be repaid for about 25 percent to 50 percent of what they’re owed by year’s end, he said.
Payments to individual growers will range from about $1,400 to $300,000 under the settlement deal, though the $4.5 million represents less than 28 percent of what the farmers said they were owed for crop deliveries.