Prima Wawona, the nation’s largest stone fruit producer, has filed Chapter 11 bankruptcy after losing nearly all of its value.
The company, which is run by investment firm Paine Schwartz, is potentially looking to sell to a third-party buyer.
The big picture: Prima Wawona initiated voluntary Chapter 11 proceedings on Friday and will sell to the highest and best bidder via a court-supervised auction process.
- The Chapter 11 bankruptcy proceedings were filed in the United States Bankruptcy Court for the District of Delaware.
- If the company is not sold to a third-party, Prima Wawona could transition its ownership to its lenders through a debt-to-equity conversion.
- According to the court filing, debtors include MVK FarmCo LLC; MVK Intermediate Holdings LLC; Gerawan Farming Partners LLC; Gerawan Supply, Inc.; Gerawan Farming LLC; Gerawan Farming Services LLC; Wawona Packing Co. LLC; Wawona Farm Co. LLC; and GFP LLC.
The backstory: Prima Wawona formed in 2019 when Central Valley farmer Dan Gerawan merged his company, Gerawan Farming, with Wawona Packing. Wawona Packing was acquired by Paine Schwartz in 2017.
- As part of the deal, Gerawan stayed on as CEO until he was ousted by Paine Schwartz in December 2020.
- Prima Wawona’s value tanked after Gerawan’s removal. As The Sun previously reported, private market holdings the Maine Public Employees Retirement System has in Paine Schwartz shows the company lost 96 percent of its value.
- In July, Gerawan filed a lawsuit against Paine Schwartz for allegedly intentionally tanking his former company for financial gain. Gerawan accuses the investment firm of draining over $24 million in cash from the company in less than four years in part to enrich consulting firm McKinsey & Company.
What they’re saying: Prima Wawona CEO John Boken said in a statement that increased costs and weather-related impacts have combined to make the company’s existing structure unsustainable.
- “We are pleased that our lenders have reached an agreement and fully support this ownership transition that charts a path forward to strengthen Prima Wawona and position the business for long-term success,” Boken said. “The court-supervisord process allows for the possibility that a qualified third-party buyer will emerge as the owners of the business as an alternative to our lenders. The entire Prima Wawona organization is focused on working through this process as quickly as possible.”