Brewster Heights Packing & Orchards: $240M Debt, Going-Concern 363 Sale

Brewster Heights Packing & Orchards, LP and 12 affiliated debtors filed chapter 11 petitions on June 4, 2026 in the U.S. Bankruptcy Court for the Eastern District of Washington, opening a sale-driven case built around a proposed section 363 sale of substantially all assets to a stalking horse bidder. The 13 jointly administered cases are led by In re Brewster Heights Packing & Orchards, LP, No. 26-01136, before Judge Frederick P. Corbit, and the debtors moved on the first day to administer the family of entities together.

The sixth-generation Gebbers family tree-fruit operation entered chapter 11 carrying roughly $240 million of funded debt and what the company describes as an acute liquidity crisis driven by over-leverage, the working-capital demands of the 2025 crop cycle, and competing positions taken by its two largest secured lenders, The Prudential Insurance Company of America and BMO. To fund the 2026 harvest and preserve perishable inventory, the debtors are seeking postpetition financing from Sandton Capital Solutions Master Fund VI, LP, while the board has approved a letter of intent with U.S. Farming Realty Trust III, LP to serve as stalking horse for the asset sale.

Debtor(s)	Brewster Heights Packing & Orchards, LP (13 jointly administered entities)
Court	U.S. Bankruptcy Court, Eastern District of Washington
Case Number	26-01136
Petition Date	June 4, 2026
Judge	Hon. Frederick P. Corbit
Funded Debt	Roughly $240 million across six prepetition facilities
Stalking Horse	U.S. Farming Realty Trust III, LP (proposed § 363 sale)
DIP Lender	Sandton Capital Solutions Master Fund VI, LP (terms pending)

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Vertically Integrated Orchard Platform and Asset Base

The debtors are a vertically integrated grower, packer, marketer, and shipper of apples, cherries, and pears, operated by the Gebbers family in its sixth generation of leadership from a base in Brewster, Washington, with roots in the area dating back to 1900. Cass Gebbers leads the family operation. The company employed approximately 3,742 people as of the petition date, at the peak of a labor-intensive, perishable crop cycle.

The asset base spans roughly 8,500 acres of orchard land — about 6,816 acres of apple orchards, 1,581 acres of cherry orchards, and 1,659 acres of pre-productive plantings — planted across more than 25 varieties, including proprietary fruit marketed as SugarBee, Rockit, and Lucy. The company sold approximately 17.3 million boxes of fruit in fiscal year 2024.

The corporate structure concentrates operations in BHPO, a Nevada limited partnership whose sole general partner is Gebbers Orchards, Inc., a Washington corporation, with all other debtors wholly owned by BHPO. Orchard land-holding entities include P&G Orchards, LLC; Eastco, LLC; Northco, LLC; Westco Orchards, LLC; and REPO, LLC, with the balance of the debtor group made up of operating and storage entities such as D&E Storage, LLC and Westco Sales, Inc. Two affiliates sit outside the bankruptcy: Chelan Fresh, the grower-owned sales and marketing arm that represents the Gebbers fruit, and Gebbers Farm Services, LLC, a centralized cost-sharing vehicle for the debtors and affiliated farms.

Prudential and BMO Defaults and the Road to Filing

The debtors attribute the filing to an acute liquidity crisis layered on top of sector-wide pressure in the Washington tree-fruit industry. The first-day declaration cites rising input costs, trade challenges, labor concerns, and infrastructure issues, and notes that high labor costs consumed 99% of the return per bin in 2023 as the state's concentration of apple and cherry production declined. Washington agricultural labor has been a persistent pressure point for the company: Gebbers Farms previously fired approximately 550 workers following an immigration audit in Brewster, and reached a nearly $1 million settlement with Washington Labor & Industries over COVID-related worker-condition violations in 2021.

The financial breakdown ran through the company's two senior lenders in sequence. The debtors triggered financial covenant defaults under the Prudential Loan Agreement in late 2024, followed by defaults under the BMO syndicated and bilateral facilities in May 2025. After refinancing negotiations failed, the company entered short-term forbearance agreements with both BMO and Prudential that were extended through August 31, 2025 on the condition that the debtors pursue an expedited sale or restructuring; the lenders then agreed to forbear further until roughly November 15, 2025 while restructuring proposals were explored.

The immediate trigger was cash collateral. By late March 2026, BMO informed the debtors that it would permit no further use of cash collateral even as crop-season operating expenses escalated. To avoid an immediate receivership or an early-April 2026 filing, the debtors secured an $8 million crop loan from Backstop Ag Capital that funded operations through April and pushed the petition into June. As a condition of that bridge financing, the debtors were required to prepare for a chapter 11 filing on a limited budget and to appoint an independent director acceptable to Prudential; by the petition date the prepetition facilities had expired and the lenders insisted that any further borrowing occur only within a chapter 11 framework.

Capital Structure and the Prudential–BMO Split

As of the petition date the debtors carried roughly $240 million of funded debt across six prepetition instruments, dominated by a single Prudential term facility and two cross-collateralized BMO loans.

Facility	Lender / Agent	Outstanding	Status
Prudential Loan (May 28, 2020)	The Prudential Insurance Company of America	~$162,340,000	Secured
BMO Syndicated Loan (June 10, 2021)	BMO, as Syndicated Agent, and Syndicated Lenders	~$56,270,441	Secured
Crop Loan (March 25, 2026)	Backstop Ag Capital	$8,000,000	Secured (2026 crop)
BMO Bilateral Loan (Aug. 29, 2022)	BMO, as Bilateral Lender	~$6,569,000	Secured
Apple House Note (Dec. 1, 2019)	Apple House	~$6,000,000	Unsecured
NCNB Loan (June 27, 2013)	North Cascades National Bank	~$700,912	Secured

The Prudential Loan Agreement, dated May 28, 2020, carried approximately $162.34 million outstanding and is secured by real property, certain personal property, and an assignment of leases and rents. It has been modified repeatedly, most recently through a Fourth Amended and Restated Loan Modification and Forbearance Agreement dated March 27, 2026.

The BMO exposure is split across two cross-defaulted, cross-collateralized facilities. The BMO Syndicated Loan Agreement of June 10, 2021 had roughly $56.27 million outstanding and is secured by substantially all personal property plus liens on identified real property, including the King Blossom, Hunt Ranch & Asmussen, Gamble Lumber Company Town Mill Site, Snyder Flats, and MC-Guelich properties. The BMO Bilateral Loan Agreement of August 29, 2022, with about $6.57 million outstanding, is secured by land and fixtures at the King Blossom property in Brewster. Both BMO facilities were amended by forbearance agreements dated September 10, 2025.

The remaining debt rounds out the stack and frames the intercreditor map. The Backstop Ag Capital crop loan holds a first-priority lien in the 2026 orchard crop, ranks pari passu with other 2026 crop loans, and is subject to a subordination agreement with both Prudential and BMO. The North Cascades National Bank loan from June 27, 2013 had roughly $700,912 outstanding with a 2033 maturity, and the approximately $6 million Apple House Note — converted from accounts payable in December 2019 and amortized over 15 years — is unsecured and subordinated to all other debt. The competing positions of Prudential and BMO over their respective collateral packages are cited as a core driver of the liquidity squeeze.

Backstop Crop Loan and the Sandton DIP

The debtors are seeking postpetition financing from Sandton Capital Solutions Master Fund VI, LP on a senior secured, superpriority basis. Through the DIP motion, the debtors request interim and final authority to obtain the financing, grant liens and superpriority administrative-expense status to Sandton, and set a final hearing, framing the relief as necessary to avoid an immediate shutdown or liquidation. The stated purpose is to provide liquidity to fund the 2026 crop harvest, preserve perishable inventory, pay employee wages, and meet other critical operating expenses through the 2026 crop season, with a 30-day cash-flow projection used to size the postpetition requirement. The specific DIP economics — commitment amount, interim draw, pricing, maturity, milestones, and carve-out — are not set out in the first-day declaration and remain to be confirmed once the DIP motion and any interim order are entered.

The Backstop crop loan executed before the filing functions as the bridge into this financing. Secured by a first lien on the 2026 crop and subordinated to Prudential and BMO, the $8 million facility carried the operation through the early harvest season and bought the time needed to file with a sale process and DIP lender lined up rather than under a receivership.

The debtors also asked the court to bless the cash side of the business on day one. They operate an integrated cash-management system of approximately 18 bank accounts across five banks — BMO, Wells Fargo, Wheatland, Columbia, and WTB — supplemented by corporate cards and recurring intercompany transactions they seek authority to continue. A separate first-day motion seeks authority to pay prepetition employee wages and benefits, reflecting the labor-intensive nature of an operation staffed by thousands of seasonal and full-time workers at the peak of the crop cycle.

Capstone Marketing Process and the U.S. Farming Stalking Horse

The sale path predates the petition. The debtors retained Capstone Capital Markets LLC as investment banker in June 2025 to run a formal marketing process, which contacted more than 80 parties, produced 49 nondisclosure agreements, and yielded seven letters of intent. The board ultimately approved a letter of intent with U.S. Farming Realty Trust III, LP for a sale or restructuring of substantially all assets under section 363, designating U.S. Farming as the stalking horse.

The debtors have signaled they will file a motion seeking approval of bidding procedures for the proposed sale. The purchase price and consideration structure, bid protections such as any break-up fee or expense reimbursement, the bid deadline, the auction date, and the sale-hearing and closing timeline are not disclosed in the first-day declaration. Restructuring leadership for the process includes Peter Richter as chief restructuring officer alongside Capstone, with an independent director added to the board at Prudential's insistence as a condition of the crop loan.

Key Timeline

The following milestones, drawn from the First Day Declaration, track the financial deterioration from initial covenant defaults through the petition date.

Date	Event
May 28, 2020	Prudential Loan Agreement executed
June 10, 2021	BMO Syndicated Loan Agreement executed
Aug. 29, 2022	BMO Bilateral Loan Agreement executed
Late 2024	Covenant default triggered under Prudential Loan
May 2025	Covenant defaults triggered under BMO facilities
June 2025	Capstone retained; formal marketing process begins
Aug. 31, 2025	Initial BMO/Prudential forbearance period extended through this date
Sept. 10, 2025	BMO syndicated and bilateral forbearance agreements
~Nov. 15, 2025	Extended forbearance period to explore restructuring proposals
Late March 2026	BMO declines further cash collateral use
March 25, 2026	$8M crop loan from Backstop Ag Capital
March 27, 2026	Fourth Amended and Restated Prudential forbearance agreement
June 4, 2026	Chapter 11 petitions filed; first-day declaration, joint administration, DIP, and wages motions filed

Frequently Asked Questions

Who is the proposed buyer for Brewster Heights Packing & Orchards?

U.S. Farming Realty Trust III, LP serves as the stalking horse under a board-approved letter of intent for a proposed section 363 sale of substantially all assets. The designation followed a Capstone-run marketing process that contacted more than 80 parties and produced seven letters of intent. Final terms depend on the forthcoming bidding-procedures and sale motions.

Who is providing debtor-in-possession financing?

Sandton Capital Solutions Master Fund VI, LP is the proposed DIP lender, with the debtors seeking senior secured, superpriority financing to fund the 2026 harvest and preserve perishable inventory. The commitment amount, pricing, maturity, and milestones were not stated in the first-day declaration and remain subject to the DIP motion and any interim order.

What caused the bankruptcy?

The debtors point to over-leverage, the working-capital demands of the 2025 crop cycle, and competing positions taken by senior lenders Prudential and BMO, against a backdrop of rising input costs and labor pressure in the Washington tree-fruit sector. Covenant defaults beginning in late 2024 led to successive forbearances and, ultimately, BMO's refusal to allow further use of cash collateral in March 2026.

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