GRAWN — A grower-owned fruit cooperative with several Western Michigan members has filed for Chapter 11 Bankruptcy protection, following a series of setbacks to its operations and annual harvest.
Cherry Growers Inc., based in Grawn, 10 miles south of Traverse City, petitioned the U.S. Bankruptcy Court for the Western District of Michigan in late August for relief while it seeks to repay a bevy of creditors including numerous co-op members.
The co-op, which has approximately 53 members, said the bankruptcy filing was the result of business challenges that followed the 2012 crop failure in Northern Michigan, according to Eric MacLeod, president and general manager of Cherry Growers.
“(It) annihilated both the tart cherries and processing apple volume that we were exclusively engaged in,” MacLeod said of the 2012 harvest.
In 2013, Cherry Growers also decided to exit the institutional applesauce market, which accounted for a significant portion of the co-op’s revenues. While it cut labor extensively, “it wasn’t enough to offset losses in revenues,” MacLeod said.
MacLeod said the co-op was using the court system to “give us some time to conclude a realignment of assets to allow those to go through to fruition."
He declined to disclose specifically what that asset realignment would look like.
Cherry Growers lists approximately $8.1 million in assets and a total of $16.7 million in liabilities — including $9.4 million owed to secured creditors and $7.3 million owed to unsecured creditors, according to court documents.
The cooperative lists its largest secured creditor as Huntington National Bank, which it owes nearly $7.9 million for loans on equipment, real estate and other assets.
Cherry Grower’s unsecured creditors include Northport-based Cherry Home Orchards LLC ($578,207), Belding-based Belleharvest Sales Inc. ($208,013), and Sparta-based Klenk Orchards LLC ($110,851).
The majority of Cherry Grower’s largest unsecured creditors include growers involved in the co-op, according to court documents.
The co-op currently employs 75 people, according to reports. MacLeod said he doesn’t expect to cut employment as part of the bankruptcy proceedings.
The company does plan to sell a portion of its real estate holdings in Grawn to Materne North America Corp., which currently leases the facilities on Cherry Grower’s property, MacLeod said. Cherry Grower’s holds $5.5 million in property in Grawn and Traverse City, according to court documents.
Materne is based in France and manufactures a variety of on-the-go applesauce products in Traverse City. The majority of Cherry Grower’s apple crop is now dedicated to supplying Materne, MacLeod said.
Overall, MacLeod is eager to put the bankruptcy proceedings behind the company and get back to work, a process which he hopes to accomplish in six months.
“(We plan) to continue doing what we’ve always done — process the region’s cherry and apples that we’ve been doing since 1939 and provide stable employment for our workforce,” MacLeod said regarding the co-ops plans post-bankruptcy.
Cherry Growers is represented by the law firm Dunn, Schouten & Snoap P.C., based in Wyoming, a suburb of Grand Rapids.
