At the urging of lenders, a federal judge has appointed a receiver to take over the Assemi family’s farming as the family deals with allegedly defaulting on over $705 million in loans.
The judge also approved $32.4 million from Prudential to the receiver in order to fund this fall’s pistachio harvest.
The backstory: Last week Prudential and U.S. Bank filed lawsuits against the Assemi family over loan agreements.
- Prudential claimed the family defaulted on over $705 million in loans this year and asked the court to appoint a receiver to manage over 50,000 acres of distressed farmland.
- U.S. Bank’s lawsuit specifically centered on Maricopa, the company overseeing the Assemi’s farming operations of which U.S. Bank was the crop lender.
- U.S. Bank alleged the Assemi’s operated a secret plan known as Project X to push out The Wonderful Company as the region’s dominant pistachio producer. The Assemi’s allegedly took a $50 million loan from Prudential through Maricopa to then loan that money to Touchstone to finance the expansion of a third-party pistachio processing plant. But U.S. Bank says it needed to give consent to any such loans, which never happened.
The big picture: U.S. District Court Judge Kirk Sherriff appointed the receiver during a hearing on Wednesday, approving $32 million for him to manage the 50,000 acres.
- The receiver, who is Lance Miller of Pivot Management Group, will not have the power to sell any of the property. Miller is tasked with monitoring the pistachio harvest and business operations of the Assemi’s farming empire. Miller is also responsible for crop financing advances. Sherriff has appointed Miller as receiver until Nov. 1.
Go deeper: In his court order, Sherriff ruled that there is good cause to appoint a receiver based on the facts of the case, namely the financial issues that have struck the Assemi family this year.
- Sherriff wrote in the ruling that the Assemi’s “face significant cash flow issues and will not have sufficient cash to maintain, preserve, and care for” all of the land.
- In the lawsuit last week, U.S. Bank claimed Touchstone only had around $91,000 left in its bank account on Sep. 17, making the company effectively bankrupt since it’s bi-weekly payroll is around $450,000.
What we’re watching: All parties will return to court on Oct. 22 for a hearing on whether the receivership should be continued.
- Miller has also been ordered to file a report on Oct. 18.
