Controlled Environment Agriculture

Lakeside Produce Bankruptcy Updates

AgTech company, Lakeside produce declares bankruptcy

Key Takeaways:

  • Lakeside Produce Inc. has filed for bankruptcy with $188 million in liabilities.
  • The company’s total assets are valued at $3.58 million, while unsecured creditors are owed $18.3 million.
  • Two formal PACA complaints remain active, totaling $747,783.
  • A lawsuit seeking $1.3 million from Lakeside and its owner has been filed by U.S. produce companies.
  • Ernst & Young is overseeing the bankruptcy as an insolvency trustee.
  • The first meeting of creditors will be held on February 2, 2023.

Bankruptcy Filing Details

On January 26, 2023, Lakeside Produce Inc., a greenhouse grower based in Leamington, Ontario, filed for bankruptcy, citing $188 million in liabilities. The company, known for growing a variety of conventional and organic produce such as tomatoes, cucumbers, bell peppers, and eggplant, filed the case under No. 35-124676 in the Ontario Superior Court of Justice, Windsor Division.

Financial Overview

According to the filing, Lakeside Produce has total liabilities of $187,889,242, including $18.3 million owed to unsecured creditors and $166 million in secured claims. The company’s total assets are listed at $3.58 million, raising concerns about how much creditors will recover. Lakeside has greenhouse operations in Canada and the U.S., with facilities in Leamington, Ontario; Taylor, Michigan; and McAllen, Texas.

Active PACA Complaints and Lawsuit

Produce Blue Book, a credit rating and marketing information provider for the produce industry, reported that two formal Perishable Agricultural Commodities Act (PACA) complaints remain active against Lakeside Produce. These complaints reflect a total balance owed of $747,783.

In addition, a lawsuit is still pending against Lakeside Produce and its owner. The lawsuit, filed by three U.S. produce companies, claims $1.3 million for unpaid products sold by U.S. sellers under PACA trust rights.

Role of Ernst & Young

Ernst & Young has been appointed as the insolvency trustee to oversee the bankruptcy process. The company has filed an “assignment” in bankruptcy, which is the Canadian equivalent of a Chapter 7 filing in the U.S., indicating a plan to liquidate the company’s assets to repay its creditors.

Trustee’s Preliminary Report

A preliminary report issued by Ernst & Young (EY), Lakeside’s insolvency trustee, on February 2, 2023, provided further details on the company’s financial condition. The report notes that Lakeside faced numerous challenges starting in 2020, including the impact of the COVID-19 pandemic, supply chain disruptions, and the outbreak of the rugose virus, which significantly affected the company’s tomato crops. Rising freight and energy costs, coupled with an oversupply of seedless cucumbers in 2022, further exacerbated the company’s financial difficulties.

As of the filing date, Lakeside’s secured creditors, including the Bank of Montreal and Farm Credit Canada, hold claims totaling approximately $169.6 million. The report also indicated that Lakeside’s assets may not be sufficient to cover the full amount of these secured claims.

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