Union withdraws objection to NORPAC asset sale

A worker checks mixed vegetables flowing toward bagging machines at a NORPAC plant.

With a new labor contract in hand, a union representing food processing workers has dropped its objection to the bankrupt NORPAC cooperative’s sale of three Oregon facilities.

Last month, a Michigan-based cold storage company, Linage Logistics, agreed to buy NORPAC’s plants in Brooks, Salem and Stayton for $49 million.

Agribusiness entrepreneur Frank Tiegs plans to purchase the Brooks facility from Lineage Logistics and use it for food processing, while the future of the other properties remains unclear. Tiegs has said he also plans to buy the Stayton facility but may demolish it.

However, three local chapters of the International Brotherhood of Teamsters objected to the deal, arguing that Tiegs was a successor to NORPAC under its collective bargaining agreement with the cooperative.

According to the Teamsters, NORPAC could have been liable for damages to the union if Tiegs didn’t abide by the terms of that labor contract — unless the earlier deal was properly nullified.

NORPAC countered that it was selling the facilities directly to Lineage Logistics — not Tiegs — which would merely act as a landlord and not a food processor, absolving the cold storage firm of complying with the labor contract.

The “successorship” provision also doesn’t apply because the transaction was limited to real estate and equipment, not NORPAC’s actual business, which is now defunct, the cooperative claimed.

U.S. Bankruptcy Judge Peter McKittrick approved the sale of NORPAC’s assets on the condition that the dispute over the labor contract be resolved, with a court hearing on the matter scheduled for Friday, Jan. 24, in Portland.

The matter is now moot, though, since the Teamsters union has filed a court document withdrawing its objection to the transaction after striking a new deal with VEGCO, a subsidiary business owned by Tiegs.

NORPAC has agreed to notify the bankruptcy court when the transaction with Lineage Logistics is closed, which will mark the liquidation of virtually all of the farm cooperative’s assets. The bankruptcy proceedings will then focus on disbursing the sale proceeds among NORPAC’s creditors.

The $49 million generated by the sale of NORPAC’s Oregon facilities is in addition to roughly $107 million raised from its sale of the cooperative’s processing plant and crop inventory in Quincy, Washington, in December.

In earlier bankruptcy filings, NORPAC estimated the value of its assets at $315 million and the amount of its debt at $165 million, with about $125 million of that amount owed to CoBank, a major agricultural lender.

More than 1,400 workers have been laid off from NORPAC’s Oregon facilities since the cooperative filed for bankruptcy in August. The food processing company’s financial troubles also affect the 140 farmers who own the cooperative and the 220 contract growers in Oregon and Washington who supply it with crops.

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