The Yakima Herald has reported that Snokist Growers, primarily due to negative FDA findings in their products that caused them to loose counted-on accounts, filed for bankruptcy protection on December 7.
The Yakima-based food processing operation, over 100 years old, normally employs hundreds of workers seasonally. Due to the filing, several workers are in line to be laid off.
There are over 600 seasonal workers in their Terrace Heights food processing facility and several warehouses are spread across the Yakima Valley. Owned by over 150 growers in the cooperative, Snokist turns fruit into fruit products for sale.
Some of the fruit is only produced seasonally. Tina Moss, the public relations representative stated that it would be the seasonal help that would be the first to be laid off.
Other employees, those responsible to move inventory for up to 18 more months, are expected to stay on in the warehouse for shipping procedures.
Moss said, "There's an unlimited number of options for what happens to the processing plant in 2012" and it will be dependant on how the company is restructured under the filing.
Snokist blames the bankruptcy on negative reports made by the federal Food and Drug Administration and on their lender's inflexibility.
Court documents show that debts of almost $73.4 million are owed to over 2,000 creditors and assets are listed at $69.6 million. Starting with the largest and ending in the least, creditors include: Rabo AgriFinance for $26.5 million, Community Bank for $9.5 million, Key Bank for $1.3 million, and wages and benefits to employees for over $315,000.
In 2002, at a high point in their fruit-processing business, the company had approximately 1,000 seasonal and permanent employees, as well as hundreds of growers. But, in the last ten years, employees and benefits have been cut. To blame, per Snokist, has been a substantial strike, dropping revenue and, the worse blow, the FDA reports that labeled the food and the facilities contaminated.
Long time customer contracts - the National School Lunch Program being one of the largest - were cancelled.
In 2011 Snokist voluntarily recalled 3,300 cases of applesauce when nine children in North Carolina schools reported temporary upset stomachs. This prompted the FDA to launch an investigation - which found nine major food safety violations.
Among the violations, FDA found mold in applesauce containers that was processed for consumption, fruit containers with leaks, fruit flies, bird feathers and a lack of hand washing by employees in both the warehouse and production areas. Snokist went to work to swiftly remedy all of the complaints.
It allegedly took the FDA another five months before it could fully approve Snokist again, during which time the company had irrevocably lost far too much business to remain solvent. The company reported a loss of $1 million per month for the current fiscal year.
A Snokist release stated, "FDA's action caused an already stressed financial situation to become unworkable."
At press time, Snokist has been working to sell its inventory and other assets to defray debts to their growers and creditors.
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