Prima Wawona’s disclosure statement draws objection from committee

By Sarah Lizee

Olympia, Wash., Dec. 21 – MVK FarmCo LLC’s (Prima Wawona) disclosure statement for its Chapter 11 plan of liquidation drew an objection from the official committee of unsecured creditors, according to documents filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The committee said the plan, disclosure statement, and solicitation procedures together create a paradigm that would deprive general unsecured creditors of their right to participate in the confirmation process and gratuitously release valuable claims and causes of action against third parties – claims that creditors may not even be aware exist, and which are not discussed in the disclosure statement.

“The disclosure statement contains virtually no information, let alone adequate information, to enable general unsecured creditors to make even the one decision they would be entitled to make under the solicitation procedures: whether to opt out of the third-party release,” the committee said in its objection.

The only assets that will remain in the estates after the sale of substantially all assets to the secured lenders are potential claims and causes of action to be asserted against the debtors’ sponsor and certain directors, officers, insiders and other third parties, the committee noted.

“Recoveries on those meritorious claims and causes of action are the only possible chance of a recovery for unsecured creditors,” the committee said.

“Yet, the plan proposes to gratuitously jettison those assets for the exclusive benefit of insiders and grants the debtors discretion to select a plan administrator or liquidation trustee (a decision in which the debtors should have no input).”

A hearing on approval of the disclosure statement is scheduled for Dec. 27.

Prima Wawona is a Fresno, Calif.-based producer of stone fruit. The company filed bankruptcy on Oct. 13 under Chapter 11 case number 23-11721.

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