Prima Wawona’s interim CEO is pinning the blame of the firm’s collapse and bankruptcy on the 2020 Creek Fire and a three-year-old peach recall, per court filings.
The admission comes as Prima Wawona owner Paine Schwartz, an investment firm, is accused in a lawsuit of intentionally tanking the company for financial gain.
The big picture: Prima Wawona interim CEO John Boken detailed Paine Schwartz’s reasons for why the company went bankrupt in a declaration filed in court in October.
- Boken said Prima Wawona’s problems can be traced back to a Salmonella outbreak in August 2020. The company voluntarily recalled all peaches it distributed over the previous two months even though there was not a link to its peaches.
- The FDA investigation did not find any connection tying the company’s peaches to the Salmonella outbreak, but Prima Wawona already had borne the costs associated with the recall.
- Farmers generally have insurance to protect against recalls. Boken does not discuss what Prima Wawona’s recall insurance policy was in his declaration.
- Boken also blamed the 2020 Creek Fire, which burned nearly 400,000 acres in the Sierra National Forest.
- He said the company’s orchards and facilities were directly damaged by the fire, leading to decreased fruit production.
- Boken also said the smoke and ash from the blaze settled on the crops and negatively affected fruit quality.
- In total, Prima Wawona estimated an $18 million reduction in earnings because of the Creek Fire.
The other side: In an email response to comment from The Sun, former Gerawan Farming chief Dan Gerawan declined to comment on Boken’s declaration on the whole, noting that Prima had “tens of millions in recall insurance that covered the cost of the [2020] recall.”
The backstory: Before Prima Wawona filed for bankruptcy, Dan Gerawan – who sold Gerawan Farming to Paine Schwartz in 2019 to form the new company – filed a lawsuit against the investment firm in July.
- Gerawan accuses Paine Schwartz of draining $24 million from the company to enrich consulting firm McKinsey & Company, which maintained ties with Paine Schwartz employees.
- The company lists McKinsey as its largest unsecured creditor, owed $8 million. Despite such an outsized role in the firm and its pending bankruptcy, Boken’s declaration is silent on the role of the controversial consulting giant or why it was owed such a hefty sum.
