In the summer of 2019, H. Brooks and Company, LLC BB#: 100563 New Brighton, MN, had entered into a definitive agreement to sell its stock and become a wholly owned subsidiary of New Harvest Foods, Inc.
New Harvest Foods, owned by an investment group, completed its acquisition of H. Brooks on July 22, 2019. Additionally, a new CEO with significant product experience has been appointed to lead the company.
As part of the acquisition, New Harvest Foods, Inc. also acquired J&J Distributors BB #:100664 of St. Paul, MN, with the intention of merging the operations of J&J Distributors with H. Brooks (however, coverage of this article will only focus on H. Brooks and not J&J Distributors).
Despite the acquisition and change in management, vendors’ business experiences with H. Brooks continued to decline. The new management shared that suppliers were largely understanding, although some had backed down.
Given the ongoing struggles, a quick turnaround was proving difficult. A lack of bank funding was a contributing factor, but management still expressed a degree of optimism and was moderately confident that investment capital would be deployed to repay old supply-side obligations.
Just a few months after its acquisition, H. Brooks was assigned provisional rating numbers of (27) (76) in March 2020, meaning, respectively, “salary reported as slower” and “rating under review”. ‘an investigation’, for a further drop in reported business information.
Three weeks later, although management indicated that “some” funding had become available, a rating of (144) XX147 (149) was assigned (XX is defined as unsatisfactory business experiences, while 147 indicates that some partners trades pay better than XX; Table 7 reflects survey data observed during this period of change).
Survey data shows that 72.2% of accounts are reported as overdue, with 44.4% as severely overdue. Interestingly, for the same period, accounts receivable data shows that total delinquencies are 31.3%; however, the total number of trade line defaults was 54.1%, demonstrating a further decline and consistent with survey data, as shown in Table 7.
On June 23, 2020, the officers appointed at the time of the acquisition of New Harvest left. A new president and other executives have been announced. Less than a year later, due to the continued decline in business performance since the start of 2019, on February 2, 2021, an (86) F was reported, meaning that “financial considerations and/or reports commercial prohibit the assignment of a final score“. and reported compensation experiences were aging or processed beyond 60 days.
Several federal lawsuits, as well as Blue Book and PACA claims were filed soon after. An injunction was granted on May 27, 2021, enjoining the company, its affiliates and certain officers.
The company was reported to have suspended operations with outstanding obligations on July 8, 2021, and its PACA license was suspended for unpaid rewards on September 1, 2021.
This is an excerpt from the Credit and Finance department of the January/February 2022 issue of Produce Blueprints Magazine. Click here to read the full issue.