Creamery asks court to help keep the lights on and milk cold

Bankruptcy court hearing on utility obligations set for Friday in Santa Rosa

Originally published in the "5-7-09" issue.

Humboldt Creamery lawyers will go before US Bankruptcy Court Judge Alan Jaroslovsky tomorrow morning in Santa Rosa requesting that utility companies that serve the creamery be ordered to not cut off service.

Humboldt Creamery, LLC uses electricity, natural gas and water from approximately seven different utilities under 12 different accounts. In a motion filed with the court, attorneys argue that the “continued provision of the utilities’ services is absolutely critical to the debtor’s survival.

“Most of the debtor’s inventory of raw milk and finished goods (including ice cream, frozen novelty items and fluid milk) would spoil and become worthless without the utilities’ continued services,” states the company’s Chief Financial Officer Tony Titus in a declaration filed with the court. The declaration states that the creamery is prepared to provide each utility with adequate assurance of payment in the form of a deposit, equal to one-half of the cost of the utility services that the creamery estimates it will use during a one month period.

Proposed deposits include almost $100,000 with PG&E for electricity and gas at its Fernbridge, Loleta and Stockton facilities and $2,500 with California Water Service for its Los Angeles plant. Alist of the creamery’s utilities show that it was current only through February for most of its bills, however the last payments to PG&E were made in January.

Meanwhile, the 42 (not 50, as has been previously reported and stated by creamery officials) member/producer owners of the cooperative met again on Tuesday to discuss the future of the 80- year-old cooperative.

“The gist of the discussions revolved around the formation of a new company and ownership,” said CEO Len Mayer. “Who wants it, what piece they want. These are all good discussions they should have and need to have.”

Mayer said questions raised include whether the dairymen would be full members, partial members or just suppliers. In the meantime, they continue, he said, to attempt to put together financing to make an offer on the business to the bankruptcy court. As to whether dairymen would have to pony up their own money to buy the company back, Mayer said that depends “precisely on what their source of funds ends up being.

“In some cases, they would have to put in no more money than what they’ve already put in and some cases it would be significantly more than that.”

Two more potential buyers visited the Fernbridge plant this week, said Mayer. Several dozen others have signed up with an on-line data room and been given passwords to inspect the company’s financial details.

As to any news on prosecution of the alleged fraud committed by former CEO Rich Ghilarducci, Mayer said the company continues to send documents to various agencies, but that so far there has been no news.

“The FBI, when we ask, just tells us, ‘no comment’,” he said.

Newspaper advertisements thanking the community for its support during the past few months were scheduled to appear this week, including in today’s Enterprise.

“We have received a ton of thank you cards and emails from all over the country and especially from Humboldt County, expressing support for the creamery,” said Mayer. “We haven’t done anything officially to acknowledge that support. Frankly, we just haven’t had time.”

And so, a marketing company who had previously bid on doing work for the creamery and did not get the contract, called Mayer and said they would be willing to donate their services to design an ad. He added that newspapers also discounted their charges to run the ad, or have donated space.