Onion Company’s President Cries Out Against Lender

Select Onion Co.’s recent bankruptcy left three million pounds of onions in Oregon to sweat over their fate.

Nearly out of money to pay his employees, President Farell Larson on Friday threatened to cut the power to a massive freezer that held those onions. The day before, the court had thrown out the company’s request to spend reserve money it held for its bank.

Larson said that he “would not voluntarily convert to Chapter 7 and that he was not willing to do a ‘f—ing’ thing to help,” a federal bankruptcy watchdog wrote in a court filing after discussing the situation with one of the company’s lenders. “He also advised that he’s ready to hand over the keys and leave the operation regardless of the debtor’s fiduciary duty.”

Health regulators had said that the ammonia-powered freezer could only be operated by a select few who had proper training, limiting those who could take the wheel.

The standoff put $1 million worth of onions needlessly at risk, the watchdog said when asking the court to appoint a new lender to the company, one of the biggest U.S. onion baggers and distributors.

A  Boise, Idaho, bankruptcy judge agreed, ousting Larson and installing a Chapter 11 trustee to take over.

In a factory that slices onions, for once, there were tears of joy.

Select Onion filed for bankruptcy protection on April 12 under the name of its parent company, Larson Land Co., as it battled its lender for control over a $10.5 million bank account. Zions First National Bank had seized that money after getting an order from a state-court judge, leaving the company to turn to bankruptcy and plead with Judge Terry L. Myers for permission to spend restricted pools of cash to make payroll.

The company “has a number of contracts for sales of onions that will generate ongoing income for its operation and payment of adequate protection payments,” it said in court papers. The state order “will effectually shut down the debtor’s operation unless relief is obtained without delay.”

It’s unclear from court papers filed so far why the company, which also owes about $45 million to agriculture giant ConAgra Foods, fell behind on its loan. The company’s newly appointed Chapter 11 trustee declined to comment Tuesday on what triggered its economic hardship.

The company harvests onions grown on 9,000 acres of farmland on the Oregon-Idaho border about an hour outside of Boise. Its refrigerated onion storage facility can house more than 50 million pounds of onions, according to its website.