Information for Creditors of Partners, A Tasteful Choice Company
Case Number 22-10060 in the United States Bankruptcy Court for the Western District of Washington
THE BUSINESS HISTORY OF PARTNERS
Partners, a Tasteful Choice Company was founded in 1992 by Marian Harris, according to documents filed in the bankruptcy case by Partners’ current President, Cara Figgins. Cara and Greg Maestretti, Vice President of Operations of Partners, are Marian Harris’s children. The company has been in the family since its formation in 1992.
Originally founded to develop crackers to serve in Marian Harris’s existing Seattle-area restaurants, Partners now operates a 150,000 square foot bakery that produces crackers, cookies, and other baked goods that are distributed nationwide. Partners offers products under the Partners, Wisecrackers, All-American Crackers, Blue Star Farms, and Free for All Kitchen brands. These products are distributed through multiple channels, including on airplanes and in local grocery stores.
Partners prides itself on its long-standing customer relationships, including with Alaska Airlines, United Airlines, Delta Airlines, Costco, Amazon, and Whole Foods. The company also has strong relationships with Seattle-area retailers including QFC, Fred Myer, Metropolitan Market, Safeway, and Thriftways. In addition to these partnerships, the company maintains a business line whereby it co-manufactures products for other private label brands. These diversified income streams have allowed Partners to report increasing revenues, with a high of an expected $18 million of revenue in 2021.
THE DISPUTE BETWEEN PARTNERS, WELLS FARGO, AND PREMIUM BRANDS
It is a rare bankruptcy where a company reports record and rising revenues, as well as asset values that exceed its liabilities. However, Partners is such a case. The company was driven to bankruptcy by disputes between Partners and its secured lenders, Wells Fargo Bank (“Wells Fargo”) and Premium Brands Operating Limited Partnership (“Premium Brands”), according to President Cara Figgins’ declaration.
In mid-2017, Partners entered into a transaction with Premium Brands that called for Premium Brands to invest $2 million into Partners in exchange for equity and seats on the Partners board of directors. Then, in 2018, Partners borrowed money from Premium Brands and Wells Fargo in order to finance the construction of Partners’ current 150,000 sq.ft. bakery, since Partners had outgrown its old facility. When Partners tried to amend its agreement with Wells Fargo, Premium Brands interfered and blocked the changes.
In the meantime, Partners has defaulted on the money it owes to Premium Brands, which Partners says refuses to reasonably amend its loan terms. This has caused Partners to also default on its obligations to Wells Fargo. Partners has sued in state court and gotten a ruling finding that the Premium Brands designees on Partners’ board of directors acted wrongly in failing to act in Partners’ best interests. The bankruptcy was filed to prevent Premium Brands and Wells Fargo from seizing the company or its assets until a reasonable solution can be reached.
HOW UNSECURED CREDITORS CAN BENEFIT FROM THE BANKRUPTCY FILING
So, what does all of this legal infighting mean for unsecured creditors of Partners? Well, it is good news that Partners reports that its assets are worth more than what it owes to creditors. That means that the Court, the Debtor, and all creditors should be able to work together to find a solution that is in everyone’s favor. It is obvious, though, that the dispute between Partners and its secured creditors will have repercussions, likely including making the bankruptcy case take a while to resolve.
The good news is that unsecured creditors can band together to make their voices heard in Chapter 11 bankruptcies without having to pay out of pocket for legal costs. There is a procedure in business bankruptcies where creditors can elect to serve on an official committee of unsecured creditors. If a committee is appointed, it is permitted to hire a law firm to represent it. Bankruptcy law requires the Debtor – not the creditors – to pay for the lawyers for the committee of unsecured creditors.
Forming a committee is typically a good way for unsecured creditors to ensure that they are treated fairly in bankruptcy cases. A committee can advocate for full repayment of unsecured creditors. Whether a committee is warranted in any particular case will depend on the circumstances of the case. If you have any questions about the Partners bankruptcy case or anything discussed on this page, please feel free to reach out to PRLT attorneys with your questions or concerns.
PRLT does not represent Partners, a Tasteful Choice Company or any of its affiliates. The content on this page is provided for informational purposes only. Nothing on this page or this website creates an attorney/client relationship between you and PRLT. Nothing on this page is legal advice. If you have any questions about the Partners bankruptcy case or anything discussed on this page, please contact us.