Foremost Liquidation Delayed Again
U.S. Bankruptcy Judge Karen Overstreet has given Washington dairy farmers and other creditors one last chance to show that U.S. Bank of Washington was an investor - not a lender - in the former Foremost Dairies Northwest milk-bottling firm.
In a Seattle hearing last week, Overstreet denied a request from court-appointed bankruptcy trustee Robert Steinberg to liquidate the Foremost estate and issue its remaining $11.6 million in assets to U.S. Bank.
The dairy has been bankrupt since 1991, nearly two years after U.S. Bank financed the purchase of the company by Florida businessman Michael Cameron.
The recent ruling puts U.S. Bank’s position as first lienholder in jeopardy since a judge would not distribute assets of a bankrupt company to an investor.
Overstreet ordered Steinberg to explain at an Oct. 18 hearing why U.S. Bank should get all the money. She also denied his request to destroy certain records.
“She demonstrated skepticism about the trustee,” said James Moilenan, a Bellevue real estate consultant and Foremost creditor who opposes Steinberg. “There’s a real shot here.”
Moilenan and other creditors have until Nov. 15 to argue why U.S. Bank is not entitled to Foremost’ assets.
The bank in 1989 lent $25 million in cash and credit to Cameron to buy the Foremost factories in Seattle and Spokane and a warehouse in Portland. When Cameron got into financial trouble, U.S. Bank forced Foremost into receivership, cutting farmers out of nearly $3 million in milk they had already delivered.
The estate sold the Spokane plant, which was renamed Broadview Dairy. Cameron was convicted for tax fraud and sentenced to prison.
Moilenan argues that U.S. Bank’s loan was an investment because Cameron borrowed his down payment, did not register his company in Washington and was under investigation for bank fraud in a separate case.
, DataTimes